MicroStrategy issues 700 million USD in corporate bonds to invest in Bitcoin

MicroStrategy announced a $700 million private offering of convertible senior notes, scheduled to mature in 2030, as detailed here. This increase from the initial $600 million proposal showcases the company's proactive stance on its Bitcoin investment strategy. The strategic financial move is expected to conclude on March 8, 2024, targeting eligible institutional buyers, emphasizing MicroStrategy's commitment to using its assets for high-risk cryptocurrency acquisitions.

7 Billion Dollar Corporate Bonds with Interest Rate of Only 0.625%

MicroStrategy's convertible bonds will offer an annual interest rate of 0.625%, payable semi-annually. These corporate bonds are scheduled to mature on March 15, 2030, unless called for redemption, repurchased, or converted before the maturity date. Starting from March 22, 2027, MicroStrategy has the option to convert these notes into cash at specific price conditions of its Class A common stock, ensuring flexibility in managing financial obligations.

Investors holding these notes are granted significant rights and protections, including the right to require MicroStrategy to repurchase their notes on September 15, 2028, or in the event of a fundamental change. Additionally, these notes can be converted into cash, shares of MicroStrategy Class A common stock, or a combination of both at MicroStrategy's discretion, providing appeal to investors seeking flexibility and potential upside in MicroStrategy stock performance.

Conversion Price Set Above Market Price, Showing Confidence in Own Stock Price

The initial conversion rate is set at approximately 0.6677 shares of MicroStrategy Class A common stock per $1,000 principal amount of notes, reflecting MicroStrategy's confidence in its future stock performance and the underlying value of its Bitcoin investments.

The net proceeds from this issuance are estimated to be around $684.3 million, potentially reaching $782 million if additional notes options are fully exercised, providing a significant financial inflow for MicroStrategy from this issuance.

$700 Million Allocated for Bitcoin Purchase

MicroStrategy explicitly stated its intention to use the net proceeds from this issuance to further increase its Bitcoin holdings as well as for general corporate purposes.

This decision underscores the company's view of Bitcoin as a valuable asset within its investment strategy, reflecting a broader trend of increasing interest among corporations in cryptocurrency as a legitimate and valuable asset class.

It is worth noting that this issuance is specifically targeted at qualified institutional buyers, following the 144A rule under the Securities Act of 1933. The sale of the notes and any MicroStrategy Class A common stock that may result from the conversion of these notes will not be registered under the Securities Act or the securities laws of any state, and therefore, cannot be offered or sold within the United States without registration or an applicable exemption.

Through this strategic financing initiative, MicroStrategy not only emphasizes its deepening commitment to Bitcoin investments but also sets a precedent for how companies can utilize financial instruments to support their investment strategies in the cryptocurrency space. As MicroStrategy continues to lead in corporate Bitcoin investments, the market will closely monitor the long-term impact of these investments on its financial health and stock performance.