MicroStrategy Aims to Raise $500 Million via Convertible Senior Note Offering

MicroStrategy Aims to Raise $500 Million via Convertible Senior Note Offering

MicroStrategy, a prominent business intelligence firm and major corporate bitcoin holder, is aiming to raise $500 million through a convertible senior note offering, with an additional option to secure $75 million. According to a statement released on Thursday, the notes, set to mature in 2032, will be issued privately to qualified institutional investors, subject to market conditions and other factors. These unsecured notes will bear interest semi-annually and can be converted into cash, MicroStrategy class A common stock, or a combination of both.

The funds garnered from this offering are intended for acquiring additional bitcoin and for general corporate purposes, as stated by MicroStrategy. The convertible notes offer the company flexibility in managing its debt while allowing potential benefits from equity appreciation. Since 2020, MicroStrategy has been heavily investing in bitcoin, aligning with its strategy of using debt financing to bolster its bitcoin holdings.

In a previous move this March, MicroStrategy proposed a $600 million convertible note offering following a significant increase in its share price, subsequently acquiring an additional 9,245 BTC for $623 million in cash. Including two smaller acquisitions in March and April, the firm now holds a total of 214,400 BTC, acquired at a total cost of $7.54 billion, or approximately $35,180 per bitcoin. At current bitcoin prices, MicroStrategy’s holdings are valued at $14.5 billion.

Currently, MicroStrategy’s share price has decreased by 1.5% in pre-market trading to $1,581, as per TradingView. Despite this, the stock has surged over 30% in the past month and has seen a 130% increase year-to-date.

Additionally, MicroStrategy announced on Thursday its plans to redeem $650 million worth of its 2025 convertible senior notes. The redemption, scheduled for completion on July 15, will be at 100% of the principal amount plus accrued interest. Noteholders have the option to convert these notes into MicroStrategy shares at a rate of 2.5126 shares per $1,000 principal amount, equivalent to a conversion price of $397.99 per share. These conversions will be settled entirely in shares of MicroStrategy’s class A common stock.

In December 2020, MicroStrategy issued $650 million of 0.75% convertible senior notes due in 2025 as part of its strategic initiative to acquire bitcoin and establish the cryptocurrency as its primary reserve asset.