MicroStrategy Completes $1.01 Billion Convertible Notes Offering to Repay Debt and Purchase Bitcoin

MicroStrategy Completes $1.01 Billion Convertible Notes Offering to Repay Debt and Purchase Bitcoin

MicroStrategy, a business intelligence firm, has successfully raised $1.01 billion through a convertible senior notes offering. The funds will be used for debt repayment and acquiring additional Bitcoin, further cementing the company’s commitment to cryptocurrency as a key part of its financial strategy.

Convertible Notes Offering Details

The newly issued convertible notes carry a 0.625% interest rate, payable semi-annually, and are set to mature in September 2028. The conversion price is approximately $183.19 per share, which represents a 40% premium over MicroStrategy’s average stock price as of September 17, 2024. This substantial premium underscores investor confidence in the company’s future performance.

Allocation of Funds

Proceeds from the offering will be used to redeem $500 million worth of the company’s 6.125% Senior Secured Notes on September 26, 2024. The remainder will go toward purchasing additional Bitcoin and other corporate purposes, consistent with MicroStrategy’s strategy of using Bitcoin as a core treasury reserve asset.

Early Redemption Option

MicroStrategy has also provided an option for early redemption starting in December 2027, allowing the company to repurchase the notes under specific conditions. However, at least $75 million of the notes must remain outstanding if MicroStrategy chooses to redeem a portion of them.

Targeted at Institutional Buyers

The offering was conducted under Rule 144A, exclusively targeting qualified institutional buyers. As a private placement, it was not registered under the Securities Act, meaning the issuance of shares upon conversion is limited to private investors.

Expansion of Debt Offering

Originally, MicroStrategy planned to raise $700 million but increased the offering by $175 million, bringing the total to $875 million. This increase reflects strong investor demand. The expanded offering will be used to address the company’s existing financial obligations and bolster its Bitcoin reserves.

By doubling down on Bitcoin and reducing high-interest debt, MicroStrategy continues to pursue an aggressive financial strategy focused on leveraging cryptocurrency as a key asset in its treasury management.