MicroStrategy, the business intelligence company known for its significant investments in Bitcoin, is preparing to raise up to $700 million through a bond offering. CEO Michael Saylor announced this move to support the company’s ongoing Bitcoin acquisitions and manage existing debt. Convertible senior notes will be due in 2028 and will thus be unsecured.
The offering will be subject to market conditions and is expected to be led by initial purchasers, who will have the ability to buy an extra $105 million worth of the notes within thirteen days from the first sale. Specifically, the notes will bear interest semi-annually and can be redeemed for cash, MicroStrategy’s Class A common stock shares, or any combination of both.
MicroStrategy Plans to Retire $500M Secured Notes with New Bond Offering
MicroStrategy intends to use the net proceeds from this bond offering to retire $500 million of its 6.125% Senior Secured Notes due 2028. The rest will be used to buy more Bitcoins and for other operational and corporate-related expenditures. These notes are secured, and the company will retire them at a cost of 103.063% of their face amount plus interest accrued up to September 26, 2024. Therefore, 69,080 Bitcoins presently securing these notes are likely to be discharged.
As of mid-2024, its Bitcoin portfolio consists of approximately 244,800 BTC purchased at a total of $9.99 billion. More recently, the company has bought 18,300 Bitcoins for more than $1 billion of stake. MicroStrategy started its purchase of Bitcoin in 2020. This company has spent about $9.5 billion on Bitcoin, with an average cost of $38,585 per coin.
The new bonds shall be sold privately to investors under Rule 144A of the Securities Act to enable MicroStrategy to bolster its status in the cryptocurrency space. The strategy represents the company’s integration of Bitcoin into its financial management model.
