MicroStrategy is looking to raise $700 million by selling convertible senior notes to qualified institutional buyers, because – not a surprise – they want to buy more Bitcoin.
Exchanging soft money for hard money
The convertible notes will be due in 2028 and will be unsecured senior obligations of MicroStrategy.
They will pay interest every six months starting March 15, 2025. If not converted or repurchased earlier, these notes will mature in September 2028.
MicroStrategy may also redeem the notes for cash beginning December 20, 2027, but at least $75 million in principal must remain outstanding if not all notes are redeemed.
Investors will have the option to require MicroStrategy to buy back their notes for cash on September 15, 2027. The notes can be converted into cash, Class A stock, or a combination of both.
Debt payment, and Bitcoin reserve
MicroStrategy intends to use the funds first to cover the redemption of its existing senior secured notes, which is set for September 26, 2024.
This redemption is expected to cost about $523.8 million after including accrued interest.
The remaining funds will be directed toward acquiring more Bitcoin or other strategies to grow its Bitcoin holdings.
MicroStrategy made headlines again by purchasing 18,300 Bitcoin in August and September, at an average price of $60,408 per coin.
This acquisition brings their total Bitcoin holdings to 244,800 BTC, valued at around $14.14 billion.
The drop of 11% in Bitcoin’s price over the past three months isn’t small, but MicroStrategy’s plan is unaffected, and they’re still the leading corporate holder of Bitcoin.
Long-term plans
The company has faced scrutiny over its aggressive accumulation strategy but remains confident in Bitcoin’s long-term value as a store of wealth.
As MicroStrategy continues to raise capital and buy more Bitcoin, it could influence market trends and encourage other corporations to consider similar investments in digital assets, as it aready happened with Metaplanet or Defi Technologies.
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