Breaking News: MicroStrategy’s $700M Stock Sale for Bitcoin
Crypto News – American software technology company MicroStrategy has revealed the terms of a new $700 million debt offering that will be used to buy more Bitcoin and is scheduled to mature in 2032. A news release from the official states that the notes will be offered for sale in a private offering to eligible institutional purchasers under Rule 144A of the Securities Act of 1933. The offering has been increased from the $500 million aggregate principal amount that was previously disclosed.
A percentage of the sales will go toward the company’s corporate treasury, which it plans to replenish with additional Bitcoin. Based on the most recent information provided in its 2024 Q1 financial statements, Microstrategy had bought 214,400 BTC, valued at an estimated $14 billion to date.
MicroStrategy’s Note Maturities Set as 6-Month Periods
The notes, which are MicroStrategy‘s senior unsecured obligations, are due semi-annually in arrears on June 15 and December 15 of each year. Interest will be charged at a rate of 2.25% annually. If not earlier repurchased, redeemed, or converted, the notes will mature on June 15, 2032, in accordance with their conditions. MicroStrategy has the option to redeem all or any portion of the notes for cash on or after June 20, 2029, subject to specific conditions. The redemption price for the notes will be 100% of their principal amount.
What is Rule 144A?
“A more liquid and efficient institutional resale market for unregistered securities” was the goal of Rule 144A. The foundation of Rule 144A is the notion that some institutional investors possess the knowledge and experience necessary to comprehend the risks and complexities associated with private placement instruments.
Why would a Company do a Debt Offering?
One benefit of debt financing is that it makes it feasible for a company to grow faster than it otherwise might by leveraging a small amount of capital into a much larger quantity. The fact that debt payments are typically tax deductible is an additional benefit.
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