- MicroStrategy announced a proposed private offering of $500 million of convertible senior notes due 2032
- The notes will be convertible into cash, shares of MicroStrategy’s class A common stock, or a combination of both
- MicroStrategy intends to use the net proceeds from the sale of the notes to acquire additional bitcoin and for general corporate purposes
On June 13, 2024, business intelligence software company MicroStrategy announced plans to raise $500 million through a private offering of convertible senior notes. The Virginia-based company, led by CEO Michael Saylor, has aggressively accumulated Bitcoin as its primary corporate treasury reserve asset. This latest debt offering will provide further capital to expand MicroStrategy’s crypto holdings.
Details of the Convertible Notes Offering
The proposed $500 million of convertible senior notes will have a maturity date of June 15, 2032. Interest payments at a rate to be determined will be made semiannually. After June 20, 2029, MicroStrategy may redeem the notes, subject to certain conditions. Note holders will have the right to require the company to repurchase the notes on June 15, 2029.
The notes will be convertible into cash, shares of MicroStrategy class A common stock, or a combination of both, at the company’s discretion. Prior to December 15, 2031, conversion will only be allowed under certain circumstances. Thereafter, the notes can be converted until the second scheduled trading day before maturity.
MicroStrategy expects to use the net proceeds from the offering to purchase additional Bitcoin. The company said the notes will only be offered to qualified institutional buyers under Rule 144A.
MicroStrategy’s Ongoing Bitcoin Purchases
MicroStrategy first disclosed purchases of Bitcoin in August 2020, making it the first publicly-traded U.S. company to add the cryptocurrency to its balance sheet. Since then, Saylor has continued aggressively accumulating Bitcoin, taking on debt to finance the purchases.
As of May 3, 2022, MicroStrategy held approximately 129,699 Bitcoins acquired for $3.98 billion at an average price of $30,700 per token. With Bitcoin’s price around $30,000 in June 2024, the company’s holdings would be worth nearly $3.9 billion.
Saylor has been a vocal proponent of Bitcoin. He argues the cryptocurrency offers a hedge against inflation compared to holding cash. MicroStrategy is staking its future on Bitcoin, betting its volatile price will rise over time.
Conclusion
MicroStrategy’s latest proposed offering of convertible notes continues its strategy of taking on debt to acquire additional Bitcoin for its corporate treasury. With Bitcoin prices depressed, the company appears to view market conditions in June 2024 as an opportune time to add to its existing crypto stake.
