Key Points
- MicroStrategy plans to sell $500 million in convertible senior notes to fund more Bitcoin acquisitions.
- The company’s offering is conditional, based on market and other factors, and the notes will be due in 2032.
Business intelligence firm, MicroStrategy, has revealed plans to sell $500 million worth of convertible senior notes. The funds raised from this sale will be used to increase the company’s already significant Bitcoin holdings.
In an official statement released on Thursday, the company outlined that the notes, which are due in 2032, will be offered in a private sale to institutional buyers who meet certain qualifications. This is in line with Rule 144A of the Securities Act of 1933.
Conditional Sale
MicroStrategy highlighted that the proposed offering is subject to market conditions and other factors. As such, there is no certainty regarding the timing, completion, or terms of the offering.
The firm also plans to grant initial buyers an option to purchase an extra $75 million aggregate principal amount of the notes within a 13-day period from the initial issue date.
Furthermore, the company stated that the notes will be unsecured senior obligations of MicroStrategy, with interest payable semi-annually on June 15 and December 15, starting December 15, 2024. The maturity date is set for June 15, 2032, unless the notes are repurchased, redeemed, or converted earlier.
Reason for the Sale
If the proposed offering is approved, MicroStrategy plans to use the proceeds primarily for acquiring more Bitcoin and for general corporate purposes.
MicroStrategy started investing in Bitcoin in August 2020 as a hedge against inflation. At the time, it was the first publicly traded company to adopt Bitcoin as an alternative to holding cash. The company’s then-CEO Michael Saylor said its decision to start investing in Bitcoin stemmed from the belief that Bitcoin is a good store of value.
Since then, MicroStrategy has become the largest corporate holder of Bitcoin. As of May 1, 2024, the firm owns approximately 214,400 BTC, valued at around $7.5 billion after its last purchase in April.
These assets were accumulated at different time intervals with an average price of $35,158 per Bitcoin.
Most of the Bitcoin purchases were made through the sale of the company’s stock. However, in 2022, the company announced that its subsidiary MacroStrategy had secured a $205 million loan from Silvergate Bank to increase its Bitcoin portfolio. Both MacroStrategy and Silvergate agreed to use the crypto asset as collateral for the firm. This move demonstrated the company’s strong commitment and support for the leading cryptocurrency.
