- MicroStrategy plans to raise $700 million through convertible senior notes due 2028.
- The funds will be used to redeem existing senior secured notes and acquire additional Bitcoin.
- The offering will be made to qualified institutional buyers under Rule 144A of the Securities Act.
MicroStrategy is set to issue $700 million in convertible notes, with the proceeds used for Bitcoin acquisition and to redeem existing senior debt.
MicroStrategy’s $700 Million Convertible Notes Offering: Key Details
MicroStrategy® Incorporated (Nasdaq: MSTR) has announced plans to offer $700 million in convertible senior notes due 2028. These notes will be sold to qualified institutional buyers in a private offering under Rule 144A of the Securities Act. The company has also provided an option for initial purchasers to acquire an additional $105 million in notes within a 13-day period. The offering is subject to market conditions, and its completion is not guaranteed. Proceeds from the sale will be used for strategic purposes, including Bitcoin acquisition and redeeming existing senior secured debt.
Senior Secured Notes Redemption and Bitcoin Acquisition Plans
MicroStrategy plans to redeem its outstanding $500 million Senior Secured Notes due 2028, using part of the proceeds from this new issuance. A redemption notice has already been issued, with the Senior Secured Notes set to be redeemed on September 26, 2024, for a total of $523.8 million, including accrued interest. The remaining balance will be used to acquire additional Bitcoin, solidifying the company’s strategy of increasing its cryptocurrency holdings. As part of the redemption, approximately 69,080 bitcoins used as collateral will be released, further enhancing MicroStrategy’s financial flexibility.
Conversion Terms and Market Conditions
The notes will be unsecured and bear interest payable semi-annually on March 15 and September 15, starting in 2025. The initial conversion rate and interest rate will be determined at the time of pricing. The notes can be converted into cash, shares of MicroStrategy’s Class A common stock, or a combination of both, at the company’s discretion. MicroStrategy retains the right to redeem the notes on or after December 20, 2027, subject to certain conditions, while holders can request repurchase on September 15, 2027. The offering’s success is contingent on favorable market conditions.
Regulatory Compliance and Private Offering Details
The offering is made to qualified institutional buyers under Rule 144A of the Securities Act, and neither the notes nor the shares to be issued upon conversion are registered under U.S. securities laws. As such, they cannot be offered or sold in the U.S. without proper registration or an exemption. This announcement does not constitute a sale or an offer to buy the notes, which will only be available through a private offering memorandum. Investors should be aware that the offering and redemption may not be completed as outlined, as market conditions could influence the outcome.
Conclusion
MicroStrategy’s bold move to issue $700 million in convertible notes further underlines its commitment to Bitcoin acquisition as a core business strategy. With the potential redemption of $500 million in senior secured notes and the release of 69,080 bitcoins from collateral, the company positions itself to expand its Bitcoin holdings while enhancing its financial flexibility. Market conditions and regulatory factors will play a crucial role in the final terms of the offering and its overall success.
