MicroStrategy has announced the pricing of their $700 million offering of 2.25% convertible senior notes due in 2032, seeking to boost the company’s financials and attract institutional investors.
The notes are being sold to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as per the announcement. MicroStrategy has offered first purchasers the chance to purchase an additional $100 million in notes within 13 days of issuance.
The offering was expanded from $500 million to $700 million, with original purchasers having the opportunity to buy up to $100 million more in notes. The offering is scheduled to close on June 17, 2024, subject to the satisfaction of customary closing conditions.
Furthermore, if certain conditions are met, MicroStrategy can redeem these notes beginning June 20, 2029, particularly if the company’s stock price reaches 130% of the conversion price within a specified time frame. Holders can request that the company repurchase the notes on June 15, 2029, or upon certain fundamental changes.
The notes are convertible into cash, shares of MicroStrategy’s class A common stock, or a combination of the two. The initial conversion rate is 0.4894 shares per $1,000 principal amount, with a conversion price of about $2,043.32 per share. This price represents a 35% premium over MicroStrategy’s recent average stock price.
The estimated net proceeds are around $687.8 million, potentially rising to $786 million if the option is fully exercised. MicroStrategy intends to use these funds to acquire more Bitcoin and for general corporate purposes.
MicroStrategy continues its strategy of using convertible debt to invest extensively in Bitcoin, demonstrating its continuous commitment to this cryptocurrency as a primary treasury reserve asset.​
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