Upon approval of the proposed offering, MicroStrategy intends to use the proceeds primarily for purchasing more Bitcoin and for general corporate purposes.
MicroStrategy, a business intelligence company, has announced its intention to sell $500 million worth of convertible senior notes to fund further Bitcoin (BTC) acquisitions. This move aims to bolster the company’s already substantial Bitcoin portfolio.
In an official announcement on Thursday, MicroStrategy detailed that the notes will be due in 2032 and will be offered in a private sale to qualified institutional buyers, in accordance with Rule 144A of the Securities Act of 1933.
Conditional Offering
MicroStrategy emphasized that the planned offering is subject to market and other conditions. As a result, there is no guarantee regarding the timing, completion, or terms of the offering.
The company also plans to grant initial purchasers an option to buy up to an additional $75 million aggregate principal amount of the notes within a 13-day period from the initial issue date.
Additionally, the business intelligence firm said the notes will be unsecured senior obligations of MicroStrategy, bearing interest payable semi-annually on June 15 and December 15, starting December 15, 2024. The maturity date is set for June 15, 2032, unless the notes are repurchased, redeemed, or converted earlier.
Purpose of the Sale
Upon approval of the proposed offering, MicroStrategy intends to use the proceeds primarily for purchasing more Bitcoin and for general corporate purposes.
MicroStrategy began its Bitcoin journey in August 2020 when the company started investing in Bitcoin as a hedge against inflation. At that time, the company was the first publicly traded company to adopt Bitcoin as an alternative to holding cash. The company’s then-CEO Michael Saylor said its decision to start investing in Bitcoin stemmed from the company’s belief that Bitcoin is a good store of value.
“This investment reflects our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash,” he said.
Since initiating its Bitcoin acquisition strategy, MicroStrategy has become the largest corporate holder of the cryptocurrency. As of May 1, 2024, the firm owns approximately 214,400 BTC, valued at around $7.5 billion after its last purchase in April.
These assets were accumulated at different time intervals with an average price of $35,158 per Bitcoin.
Most of the Bitcoin purchases were acquired through the sale of the company’s stock. However, in 2022, the company announced that its subsidiary MacroStrategy had secured a $205 million loan from Silvergate Bank to increase its Bitcoin portfolio. Both MacroStrategy and Silvergate agreed to use the crypto asset as collateral for the firm. The move showed the company’s unwavering commitment and support for the leading crypto asset.
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