MicroStrategy, a leading American software technology firm, announced an increase in its latest convertible senior notes offering to $700 million. The company plans to use the proceeds to purchase more Bitcoin and for general corporate purposes.
Details of the Debt Offering
MicroStrategy’s official press release revealed that the notes will be sold privately to qualified institutional buyers under Rule 144A of the Securities Act of 1933. Initially set at $500 million, the offering has now increased to $700 million. The company plans to allocate a portion of the proceeds to augment its already substantial Bitcoin holdings, which currently total 214,400 BTC, valued at approximately $14 billion based on Q1 2024 financial data.
Terms and Conditions of the Offering
The unsecured senior obligations will carry an interest rate of 2.25% per annum, payable semi-annually on June 15 and December 15. They will mature on June 15, 2032, unless repurchased, redeemed, or converted earlier according to the agreement terms.
Starting June 20, 2029, MicroStrategy can redeem any portion of the notes for cash at a redemption price equal to 100% of the principal amount of the notes.
MicroStrategy estimates net proceeds from the sale to be around $687.8 million, after accounting for initial purchasers’ discounts, commissions, and estimated offering expenses. If the initial purchasers fully exercise their option to purchase additional notes, total proceeds could reach approximately $786 million.
The firm has made clear its intentions to use these net proceeds for acquiring additional Bitcoin and supporting other corporate needs.
Commitment to Bitcoin
MicroStrategy’s decision to expand the offering from $500 million to $700 million underscores its ongoing commitment to Bitcoin. This follows the company’s previous announcement on June 13 to raise $500 million through a similar offering. The move aligns with MicroStrategy’s long-term strategy to strengthen its position in the cryptocurrency market, solidifying its reputation as a major Bitcoin holder.
It’s important to note that the offering under Rule 144A of the Securities Act of 1933 means the notes will not be registered with the United States Securities and Exchange Commission (SEC). Consequently, these notes cannot be traded in public markets unless they meet specific SEC legal prerequisites.
