MicroStrategy Plans to Sell $700M in Convertible Notes to Boost Bitcoin Investments
Summary:
Amidst a thriving cryptocurrency market, Bitcoin (BTC) investor MicroStrategy is planning to sell $700 million in convertible notes due 2030, with an annual interest rate of 0.625%. The proceeds from the sale will be used to buy more Bitcoin or cover corporate costs. Currently, the company holds 193,000 BTC, which represents a total balance of $12.9 billion, yielding a return of 112% since its initiation. The company's founder, Michael Saylor, has been instrumental in incorporating Bitcoin into its corporate asset allocation strategy since August 2020.
As the cryptocurrency market thrives, MicroStrategy, a corporate investor in Bitcoin (BTC), is exploring the sale of convertible notes worth $700 million, an increase from the $600 million it proposed to sell just a few days earlier. Disclosed details reveal that these MicroStrategy convertible notes, due by 2030, will sustain an annual interest rate of 0.625%, along with a per share conversion price of $1,497.68, exhibiting a 21% premium over the existing trading price of $1,234.48 at the time when the details were shared.
On September 15, 2028, or in the event of certain defined significant changes, note holders may compel the firm to buy back their notes for an amount equivalent to 100% of the principal of the notes, in addition to any accumulated unpaid interest. This buyback option is available only to certified or institutional investors. MicroStrategy has the right to redeem the notes for cash post March 22, 2027, if its common stock's trading price persistently exceeds the conversion price by 30%.
MicroStrategy anticipates garnering a net $684.3 million from the sale, or even up to $782.0 million if buyers exercise their options, with the intent to utilize the proceeds to buy more Bitcoin or cover corporate expenses. At present, the company possesses 193,000 BTC, purchased at an average rate of $31,544, equal to a total balance of $12.9 billion and yielding a return of 112% since its initiation. In tandem with this, the company's stock exhibited a return of 429.2% within the broader Bitcoin bull market.
Serving as the chairman and co-founder of MicroStrategy, Michael Saylor is a hardcore Bitcoin aficionado and was the pioneer in incorporating this digital asset into the company's corporate asset allocation strategy back in August 2020. Ever since MicroStrategy has been consistently augmenting its corporate treasury with BTC each quarter. Saylor stressed during a panel discussion at the Bitcoin Atlantis conference on March 1 that the introduction of AI and exchange-traded funds would trigger a decade-long Bitcoin "gold rush".
Published At
3/6/2024 8:17:32 PM
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