MicroStrategy Plans to Buy More Bitcoin After Issuing $700 Million in Senior Notes

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MicroStrategy Plans to Buy More Bitcoin After Issuing $700 Million in Senior Notes
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MicroStrategy Incorporated announced on September 16 that it plans to offer $700 million in senior convertible notes due 2028 to purchase more Bitcoin. According to the announcement, the issuance of these notes is subject to market conditions.

In addition, the Company is considering granting an option to purchase up to $105 million of additional notes to the initial purchasers within 13 days of issuance.

The company intends to use the proceeds from this transaction to redeem its senior secured notes, which total US$500 million and also mature in 2028. In addition, MicroStrategy may allocate the funds to purchase more Bitcoin, in line with the company’s long-term strategy of accumulating the cryptocurrency.

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The unsecured convertible notes will mature on September 15, 2028, and will begin accruing interest semi-annually beginning in March 2025. Beginning in December 2027, MicroStrategy will be able to redeem the notes for cash, although there are conditions that limit the redemption of outstanding notes. Investors will have the option to convert the notes into cash, shares of Class A common stock, or a combination of both.

Ongoing Bitcoin Buying Strategy

The company also issued a notice of redemption for its senior secured notes, with plans to redeem them on September 26, 2024. This action will release the 69,080 Bitcoins that currently serve as collateral for the secured notes.

The offering will be conducted in a private sale, unregistered under U.S. securities laws. In addition, the notes will only be available to qualified institutional buyers pursuant to Rule 144A.

This $700 million convertible note offering is part of MicroStrategy’s ongoing strategy to fund its aggressive Bitcoin accumulation, which began in 2020. Since then, the company has raised billions of dollars through similar offerings. The company has used a combination of debt and equity to fund its Bitcoin acquisitions. This is the fourth major note offering since the company adopted BTC as its primary treasury asset.

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In 2024 alone, MicroStrategy has already completed a $603.75 million offering of convertible notes with an interest rate of 0.875% and due in 2031. The company used the proceeds to acquire more Bitcoin and continue the integration of the cryptocurrency into its financial structure.

Earlier in the same year, the company had also raised $800 million with another convertible note issuance, with a rate of 0.625% and maturity in 2032.

With over 244,800 Bitcoins in its possession, valued at approximately $14.2 billion, MicroStrategy is currently the largest corporate holder of the cryptocurrency. The company continues to utilize debt offerings to manage its existing debt load and expand its Bitcoin reserves.