MicroStrategy, the largest corporate investor in bitcoin, plans to raise $500 million through a convertible senior note offering, with an option for an additional $75 million.
The notes are due 2032 and will be issued in a private offering to qualified institutional investors, subject to market conditions and other factors, the company stated on Thursday. These unsecured notes will bear interest semi-annually and can be converted into cash, MicroStrategy class A common stock, or both.
The company intends to use the proceeds from this offering to acquire additional bitcoin and for general corporate purposes. This convertible note offering provides MicroStrategy with flexibility to manage its debt while benefiting from equity appreciation.
Since 2020, MicroStrategy has heavily invested in bitcoin, using debt financing to expand its holdings. In March, following a surge in its share price, MicroStrategy proposed a $600 million convertible note offering, subsequently purchasing an additional 9,245 BTC for $623 million in cash. The firm now holds 214,400 BTC, acquired at a total cost of $7.54 billion, or $35,180 per bitcoin. At current prices, MicroStrategy’s bitcoin holdings are valued at $14.5 billion.
MicroStrategy’s share price is currently down 1.5% in pre-market trading at $1,581, according to TradingView. Despite this, the stock has gained over 30% in the past month and 130% year-to-date.
In a separate announcement on Thursday, MicroStrategy also revealed plans to redeem $650 million worth of its 2025 convertible senior notes. This redemption will be completed on July 15 at 100% of the principal amount plus accrued interest. Holders of these notes can convert them into MicroStrategy shares at a rate of 2.5126 shares per $1,000 principal amount, equating to a conversion price of $397.99 per share. MicroStrategy will settle these conversions entirely in shares of its class A common stock.
The $650 million of 0.75% convertible senior notes due in 2025 were issued in December 2020 as part of MicroStrategy’s strategy to acquire bitcoin and adopt the cryptocurrency as its primary reserve asset.
Since Saylor’s initial investment in Bitcoin in 2020, the cryptocurrency’s value has soared by 675. Despite this wave of optimism, the crypto sector remains a target for short sellers. The short interest in nine top crypto-related companies stands at 16.73% of their total outstanding shares, which well higher than the U.S. stocks average.
