MicroStrategy plans a $500M stock sale to acquire more BTC, underscoring its dedication to BTC as a treasury reserve asset.
MicroStrategy, led by CEO Michael Saylor, has announced its plan to offer a $500 million private offering in convertible senior notes.
According to the announcement, these notes, set to mature in 2032, are targeted at institutional investors. The firm intends to use the proceeds to acquire more bitcoin.
MicroStrategy and Interest of the Notes
The announcement states that interest on these notes will be paid semi-annually, with the first installment due in December 2024. The notes are set to mature in June 2032 unless they are converted, redeemed, or repurchased earlier. Starting in June 2029, MicroStrategy can redeem any portion of the notes as long as at least $75 million in aggregate principal remains outstanding.
“The notes will be unsecured, senior obligations of MicroStrategy, and will bear interest payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2024. The notes will mature on June 15, 2032, unless earlier repurchased, redeemed, or converted in accordance with their terms,” the press release notes.
However, conversion remains restricted until December 2031, when the notes become fully convertible before the maturity date. The development offers potential gains tied to MicroStrategy’s stock performance while protecting against downside risks due to the notes’ senior unsecured status.
The press release states that the notes will be offered and sold to qualified purchasers in accordance with Rule 144A of the Securities Act of 1933, which implies that the convertible senior notes and any convertible shares of MicroStrategy’s class A common stock will not be officially registered with the Securities and Exchange Commission (SEC).
Since they are not registered with the SEC, these securities cannot be bought or sold in public markets unless specific legal conditions are met.
MicroStrategy’s choice to issue convertible notes rather than traditional debt instruments demonstrates its confidence in Bitcoin’s long-term potential. Additionally, the company offers investors incentives through the option of potential equity conversion. For instance, if MicroStrategy’s (MSTR) stock price rises due to its growing focus on the digital asset, investors could benefit from the rewards.
MicroStrategy’s Previous Acquisitions
Meanwhile, on April 9, 2024, MicroStrategy added 112 BTC to its portfolio. On March 19, 2024, the firm acquired 9,245 BTC, worth $623 million.
On March 11, 2024, the firm also purchased 12,000 bitcoins, valued at $821.7 million at an average price of $68,477 per BTC.