MicroStrategy increases convertible offering to 700 million for Bitcoin acquisition
MicroStrategy has unveiled the pricing details of its offering of convertible senior notes amounting to $700 million. This announcement follows the initial offering of $500 million made by the company a day earlier, with the latest press release indicating an increase to a total of $700 million in notes. The closing date for the offering is expected to be June 17, 2024.
The company specified that the notes will be unsecured, senior obligations of MicroStrategy, carrying an interest rate of 2.25% per annum. Interest payments will be made semi-annually in arrears on June 15 and December 15 of each year, starting from December 15, 2024. The notes are set to mature on June 15, 2032, unless there is an early repurchase, redemption, or conversion.
MicroStrategy discloses pricing information for its convertible notes offering in a statement released on June 14. The conversion rate for the notes is established at 0.4894 shares of MicroStrategy’s class A common stock per $1,000 principal amount of notes. This conversion rate is approximately equivalent to $2,043.32 per share and represents a 35% premium over the U.S. composite volume-weighted average price (VWAP) of the company’s stock on June 13, 2024, which was $1,513.46.
In its update, MicroStrategy announced that the $700 million offering provides qualified institutional buyers with the opportunity to acquire an additional $100 million. The initial offering on June 13 also included an additional $75 million of the aggregate principal amount.
Furthermore, MicroStrategy revealed its plans to redeem $650 million of convertible notes due in 2025 on July 15, 2024, with all conversion requests to be settled in shares. The company anticipates a total raise of $687.8 million, which could reach up to $786.0 million if initial buyers exercise the option to acquire additional notes in full.
MicroStrategy intends to utilize the proceeds from the notes offering to purchase more Bitcoin (BTC). Currently, the company holds 214,400 BTC, making it the largest holder of Bitcoin by a corporate entity outside of BlackRock’s significant holdings that support the spot ETF.
