MicroStrategy will raise $500 million through a private stock sale to increase its bitcoin holdings. The company already holds over 1% of all bitcoins in supply, amounting to around 214,400. The stock sale will allow MicroStrategy to add more as it makes bitcoin a core component of its treasury reserve.
In a press release informing investors about the sale, MicroStrategy stated, “MicroStrategy intends to use the net proceeds from the sale of the notes to acquire additional bitcoin and for general corporate purposes.”
The sale will offer investors senior due notes, which will mature in 2032, unless MicroStrategy repurchases them for cash or converts them for its Class A common stock earlier. The sale comes with a clause stating, “Subject to certain conditions, on or after June 20, 2029, MicroStrategy may redeem for cash all or any portion of the notes.” Until then, investors can collect bi-annual interest on June 15 and December 15 every year – the first interest payments will occur on December 15, 2024.
This sale will be reserved for professional investors like financial institutions and the instruments offered under Section 144A of the Securities Act 1993. So, the stocks will not be offered publicly and thus not registered under the Securities and Exchange Commission (SEC).
Initial investors also have the privilege of purchasing an additional $75 million worth of aggregate principal amount of the senior due notes within thirteen days of the sale going live. Also, interested investors must wait until the sale goes live to know the interest rate and initial conversion price.
The press release mentioned, “MicroStrategy expects that the reference price used to calculate the initial conversion price for the notes will be the U.S. composite volume weighted average price of MicroStrategy’s class A common stock from 9:30 AM through 4:00 PM EDT on the date of pricing.”
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