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

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.

MicroStrategy Completes $1.01 Billion Upsized Offering of Convertible Notes at 0.625% Coupon and 40% Conversion Premium. $MSTR https://t.co/mJK5xwyn4S

— Michael Saylor⚡️ (@saylor) September 20, 2024

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.

🚨 @MicroStrategy expands its Debt offering by $175M, bringing the total to $875M for debt refinancing & more Bitcoin acquisitions. Convertible notes offer $MSTR stock conversion options.#MicroStrategy #Bitcoinhttps://t.co/AMYbqsW6zr

— Cryptonews.com (@cryptonews) September 18, 2024

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.