Known for its aggressive Bitcoin investments, MicroStrategy Incorporated now plans to issue convertible bonds worth a total of $600 million during the bull market. Those bonds will mature in 2030. This strategic move by CEO Michael Saylor’s company is subject to market conditions. At the executive level, the aim is to target qualified institutional buyers.
The Company is also providing initial underwriters an option to purchase up to $90 million of additional notes within a 13-day period following issuance. Due to the Bitcoin background, it is now becoming increasingly clear that the listed company primarily wants to use the additional capital to purchase additional BTC.
MicroStrategy relies on growth through bond issuance: New debt should enable the purchase of more Bitcoins
The notes will be treated as unsecured, senior obligations of MicroStrategy, with semi-annual interest payments beginning on September 15, 2024. Let’s take a quick look at the details of the notes of Bitcoin accumulating company Microstrategy. Early repayment and redemption or conversion of the bonds are possible under certain conditions. Beginning March 22, 2027, MicroStrategy has the option to repurchase all or a portion of the Notes for cash. Investors, for their part, have the right to request a repurchase of their bonds on September 15, 2028.
The convertible notes offer the option of being converted into cash, MicroStrategy Class A shares, or a combination of both. The whole thing depends on your choice of MicroStrategy. Before September 15, 2029, conversion is only possible under certain conditions.
MicroStrategy Announces Proposed Private Offering of $600 Million of Convertible Senior Notes $MSTR https://t.co/PEN5dxesIb
— Michael Saylor⚡️ (@saylor) March 4, 2024
Thereafter, this is guaranteed at any time up to two trading days before the due date. The exact conditions regarding interest rate, conversion rate and conversion price will be determined later when Microstrategy sets the price of the issue.
MicroStrategy plans to use the proceeds from the issuance of the convertible bonds primarily for the further acquisition of Bitcoin and for general corporate purposes. This strategy underpins MicroStrategy’s strong exposure to Bitcoin and reflects the company’s confidence in the long-term performance of this cryptocurrency.
While Microstrategy has been underlining its trust in Bitcoin through its investments for years under CEO Saylor, others are skeptical. The environmental friendliness factor in particular keeps many people on the sidelines when it comes to cryptocurrencies.
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