MicroStrategy Upsizes Convertible Note Offering to $875 Million
In a strategic play to strengthen positions in Bitcoin, MicroStrategy has upsized the earlier announced offering of convertible notes from $700 million by an additional 25%, taking the total offering amount to $875 million. Proceeds would be utilized for redeeming outstanding debt and buying more Bitcoin as the company pursues an aggressive strategy of investing in cryptocurrencies.
Redeeming Debt and Buying More Bitcoin
The business intelligence firm, in a release dated September 18, 2024, said it intends to use the net proceeds from the sale of the notes to redeem all of its outstanding $500 million senior secured notes bearing an interest rate of 6.125% and due in 2028. The remainder of the funds would be used for buying more Bitcoin and general corporate purposes.
Proceeds from the offering are estimated at around $864.1 million, according to MicroStrategy, which may be raised up to $997.4 million if the option to buy additional notes is fully exercised by investors.
Strengthening Bitcoin Reserves
This development is on the back of MicroStrategy recently acquiring 18,300 BTC to take its total Bitcoin holdings to 244,800 BTC, with the company’s total investment into the cryptocurrency coming in around $9.45 billion at an average price of $38,585 per Bitcoin.
The new notes issued will carry an annual interest rate of 0.625% and are due to mature in September 2028. These notes will be sold only to institutional investors and will be convertible into cash or shares of MicroStrategy’s Class A common stock.
Institutional Support for Bitcoin Strategy
Accumulation of Bitcoins remains the main MicroStrategy strategy in the spotlight among institutional investors. With the help of convertible notes, the firm has effectively deployed capital markets to further its Bitcoin acquisition strategy while redeeming debt to reduce its interest burden.
This offering, which is expected to close on September 19, 2024, cements the firm’s position as one of the biggest corporate holders of Bitcoin globally.
