MicroStrategy Completes $1B Offering of Convertible Notes for Bitcoin and Debt Repayment

Bitcoin Michael Saylor MicroStrategy

Author

Hongji Feng

Author

Hongji Feng

About Author

Hongji is a crypto and tech reporter. He graduated from Northwestern University's Medill School of Journalism with a Bachelor's and a Master's. He has previously interned at HTX (Huobi Global),...

Author Profile

Share

Copied

Last updated:

September 20, 2024 10:58 EDT

Why Trust Cryptonews

Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

MicroStrategy announced on Friday it had completed a $1.01 billion offering of convertible senior notes.

The company plans to use the proceeds to repay debt and purchase more Bitcoin, solidifying its strategy of using cryptocurrency as a primary reserve asset.

The funds will be allocated to redeem MicroStrategy’s existing senior secured notes and to buy additional Bitcoin, reinforcing its approach of holding crypto as a core element of its treasury reserves.

MicroStrategy’s New Convertible Notes Offering

The company confirmed that the convertible notes will mature in September 2028 and carry an interest rate of 0.625% per year, payable semi-annually.

These notes can be converted into cash, MicroStrategy’s class A common stock, or a combination of both, depending on the company’s preference.

The initial conversion price is set at approximately $183.19 per share, reflecting a 40% premium over the stock’s average price as of September 17, 2024.

MicroStrategy intends to use the proceeds to redeem $500 million of its 6.125% Senior Secured Notes on September 26, following the offering’s completion.

The remaining funds will go towards purchasing additional Bitcoin and meeting other corporate needs.

The company also introduced an option for early redemption starting in December 2027, allowing it to repurchase the notes under specific conditions.

MicroStrategy requires at least $75 million of the notes to remain outstanding if it decides to redeem fewer than all.

The offering was conducted under Rule 144A, targeting qualified institutional buyers.

MicroStrategy emphasized that the offering, along with the issuance of shares upon conversion, has not been registered under the Securities Act and remains limited to a private placement.

Raising Convertible Debt Offering to $875 Million

MicroStrategy recently increased its convertible senior note offering by $175 million, bringing the total to $875 million.

The company initially announced a $700 million offering on Monday to refinance existing debt and acquire more Bitcoin.

The expanded offering, maturing in 2028, will be used to address the company’s current financial obligations and bolster its Bitcoin holdings further.

By incorporating this capital into its overall strategy, MicroStrategy strengthens its aggressive approach to the crypto market, with Bitcoin serving as a core element of its treasury management.