MicroStrategy Plans $700 Million Convertible Notes Offering to Redeem Debt and Purchase Bitcoin

Highlights:

• MicroStrategy intends to offer $700 million in Senior Convertible Notes to investors.
• The proceeds will be used to pay off existing debt and purchase additional Bitcoin.
• The company has consistently adhered to its Bitcoin acquisition strategy for four years.

MicroStrategy (ticker: MSTR), the business intelligence firm turned bitcoin-trading vehicle, announced its plans to offer $700 million in convertible senior notes due in 2028. The notes will be offered through a private sale, not registered under U.S. securities laws, and will be available solely to qualified institutional buyers under Rule 144A.

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MicroStrategy is seeking funds to repay its existing debt. The announced plan details that the proceeds will be allocated to pay off $500 million in senior secured notes and to buy additional BTC. Any leftover funds will be directed toward general corporate purposes. Refinancing is a standard practice among companies, replacing old debt with new debt to secure more favorable terms. This private offering will rely on “market conditions.” 

The company stated:

“MicroStrategy intends to use the net proceeds from this offering to redeem all $500.0 million outstanding aggregate principal amount of MicroStrategy’s 6.125% Senior Secured Notes due 2028 (the “Senior Secured Notes”) and to use any balance of the net proceeds to acquire additional bitcoin and for general corporate purposes.”

MicroStrategy Third Debt Offering of 2024

MicroStrategy’s recent plan to issue $700 million in convertible senior notes is part of its broader strategy over the past few years to fund its aggressive Bitcoin accumulation. Since 2020, MicroStrategy has raised billions through similar offerings, utilizing both debt and equity to finance its cryptocurrency purchases.

This is MicroStrategy’s third debt offering of 2024. In March, the company raised approximately $700 million through a debt issuance, followed by a $500 million offering of convertible senior notes maturing in 2032 in June.

MicroStrategy Announces Proposed Private Offering of $700M of Convertible Senior Notes $MSTR https://t.co/OCq7wj2u0P

— Michael Saylor⚡️ (@saylor) September 16, 2024

MSTR Benefits From MicroStrategy Bitcoin Strategy

The firm’s BTC acquisition strategy has positively impacted MSTR stock. Over the past four years, MSTR has captured significant value compared to its peers. Notably, it was one of the few stocks to recently surge following DNC presidential candidate Kamala Harris’s debate victory over Republican opponent Donald Trump last week.

Meanwhile, the latest BTC acquisition even led to a rise in the stock price. Despite showing some volatility in the pre-market hours before the acquisition, MSTR stock closed the week up 18.74%, reaching $143.29.

MicroStrategy Holds 244,800 BTC

In its earnings call, the company reported that it had expanded its Bitcoin holdings to 226,500 bitcoins as of July 31. The total purchase price was approximately $8.3 billion, averaging $36,821 per bitcoin. Michael Saylor’s enduring faith in Bitcoin as a superior store of value continues to impact market sentiment.

In September, he acquired $1.1 billion in Bitcoin, bringing his total holdings to 244,800 BTC. This reflects a robust institutional belief in the cryptocurrency’s long-term potential. Saylor’s aggressive accumulation has consistently strengthened confidence in the asset, especially among institutional investors.

MicroStrategy has acquired 18,300 BTC for ~$1.11 billion at ~$60,408 per #bitcoin and has achieved BTC Yield of 4.4% QTD and 17.0% YTD. As of 9/12/2024, we hodl 244,800 $BTC acquired for ~$9.45 billion at ~$38,585 per bitcoin. $MSTR https://t.co/WBBRSKxA1U

— Michael Saylor⚡️ (@saylor) September 13, 2024

With ongoing acquisitions, the company’s Bitcoin investment is on track to reach $10 billion soon. MicroStrategy remains the largest corporate Bitcoin holder, with Marathon Digital in second place, holding $1.5 billion worth of Bitcoin. According to Bitcoin Treasuries, MicroStrategy’s Bitcoin holdings now account for 1.16% of the total Bitcoin supply.

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