MicroStrategy, Led by Michael Saylor, to Issue $700M Convertible Note

Nasdaq-listed MicroStrategy has put forth a proposal to issue $700 million in convertible senior notes, with $500 million earmarked for the redemption of a previous tranche of notes. The remaining funds may be allocated towards acquiring additional bitcoin.

The company, under the leadership of Executive Chairman Michael Saylor, commenced its bitcoin acquisition journey in 2020, incorporating it as a treasury reserve asset. Over time, MicroStrategy has emerged as the primary corporate purchaser of bitcoin, amassing 244,800 BTC, valued at approximately $14.2 billion based on current market prices. Recently, the company disclosed a new acquisition of $1.1 billion worth of bitcoin, leaving $900 million unutilized from a prior offering.

MicroStrategy intends to utilize the proceeds from the offering to retire $500 million of senior secured notes with a 6.125% annual yield maturing in 2028. The remainder of the funds will be channeled towards the purchase of additional bitcoin (BTC) and for general corporate purposes. Additionally, the company plans to offer the initial purchasers of the notes an option to acquire up to an additional $105 million aggregate principal amount of notes within a 13-day window starting from the issuance date of the initial notes. MicroStrategy retains the option to redeem all or a portion of the notes for cash on or after December 20, 2027, subject to specific conditions.

In a trend reminiscent of MicroStrategy’s strategy, other public entities like Semler Scientific and Japanese investment advisor Metaplanet have also ventured into issuing debt to accumulate bitcoin. Despite MicroStrategy’s shares declining by 4.9% in regular trading alongside a notable drop in bitcoin’s price, they have further decreased by 1.6% in after-hours trading. Nevertheless, the shares maintain an overall increase of around 300% on a year-over-year basis.