MicroStrategy has made a big change to its financing strategy, with the company announcing increasing the amount it is raising through convertible senior notes from $700 million to $875 million. There is also an additional $135 million option for the initial purchasers.
As many may know, MicroStrategy is already one of the largest holders of Bitcoin, and this increase suggests that they are going to keep expanding their cryptocurrency holdings. The company and its head Michael Saylor often state that Bitcoin is a central asset in its long-term strategy.
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These notes will be sold privately to qualified institutional buyers at an interest rate of 0.625% per annum, relying on Rule 144A of the Securities Act. The offering is set to close tomorrow, Sept. 19, 2024, with these unsecured senior obligations maturing on Sept.15, 2028.
Subject to the conditions in the offering terms, early redemption can start in December 2027. However, MicroStrategy’s stock performance has to exceed 130% of the conversion price over a set period for redemption to occur.
It is worth mentioning that the company plans to use the money from the offering, which is expected to be around $864.1 million, to redeem $500 million in 6.125% Senior Secured Notes in 2028.
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Once this buyback is complete, the collateral securing the Senior Secured Notes, including around 69,080 BTC, will be released. Any remaining proceeds may also be used to buy more Bitcoin, which shows how confident the company is in cryptocurrency.
