MicroStrategy announces $700M Private Offering of Convertible Senior Notes to buy more Bitcoin
Business intelligence firm Microstrategy has announced plans to offer $700 million aggregate principal amount ofconvertible senior notes due 2028 to qualified institutional buyers in a private offering.
MicroStrategy Announces Proposed Private Offering of $700M of Convertible Senior Notes $MSTR https://t.co/OCq7wj2u0P
— Michael Saylor⚡️ (@saylor) September 16, 2024
MicroStrategy plans to redeem the entire outstanding principal amount of its 6.125% Senior Secured Notes due in 2028 with the net proceeds from this offering. Any remaining net proceeds will be used by MicroStrategy for general corporate purposes and to purchase more bitcoin.
The firm released a redemption notice on September 16, 2024, which states that the Senior Secured Notes may be redeemed on September 26, 2024, subject to the closing and settlement of the notes' sale.
The redemption price will be equivalent to 103.063% of the principal amount plus any accrued and unpaid interest up to but excluding the redemption date (or roughly $523.8 million in total). All collateral, including roughly 69,080 bitcoins, securing the Senior Secured Notes will be released upon redemption of the notes.
MicroStrategy additionally expects to offer the initial note buyers the option to buy up to an extra $105 million in total principal amount of notes during a 13-day window that starts on the day the notes are first issued.
There can be no assurance as to whether, when, or on what terms the offering may be completed; the offering is subject to market and other conditions. Notes issued by MicroStrategy will be senior unsecured obligations, which is debt without collateral. Interest on the notes is due on March 15 and September 15 of each year, starting on March 15, 2025, and will be paid semi-annually.
The notes are due to mature on September 15, 2028, unless they are redeemed, converted, or bought out earlier as per their terms. On or after December 20, 2027, MicroStrategy may redeem all or any portion of the notes for cash, subject to specific requirements.
The total principal amount of the notes must be at least $75 million and not be subject to redemption as of the applicable redemption notice date in the event that MicroStrategy redeems fewer than all of the outstanding notes.
On September 15, 2027, note holders will have the right to demand that MicroStrategy repurchase all or any portion of their notes for cash. Upon MicroStrategy's election, the notes shall be convertible into cash, shares of MicroStrategy's class A common stock, or a combination of both.
The notes are convertible only under specific conditions and during specified times prior to March 15, 2028. After that, they can be converted at any moment until the second scheduled trading day that comes right before the maturity date. The notes' initial conversion rate, interest rate, and other terms will be decided upon when the offering is priced.
MicroStrategy, a corporate bitcoin holder and business intelligence firm, currently holds 244,800 bitcoins in total, having paid an average of $38,585 for each one, for a total cost of about $9.45 billion, including fees and expenses.
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