MicroStrategy to Issue $700 Million in Convertible Bonds for Bitcoin Acquisition

MicroStrategy plans to issue four-year senior unsecured convertible bonds worth $700 million for “acquiring additional bitcoins and funding general corporate purposes.” 

MicroStrategy Announces Proposed Private Offering of $700M of Convertible Senior Notes $MSTR https://t.co/OCq7wj2u0P

— Michael Saylor⚡️ (@saylor) September 16, 2024

$500 million of the raised funds will be used to repay the remaining principal on MicroStrategy’s senior secured bonds due 2028, which carry a coupon rate of 6.125%.

The current issuance includes an option to increase by $105 million. 

The coupon period is 182 days.

The bonds are set to mature on September 15, 2028, unless redeemed or converted earlier. Under certain conditions, on or after December 20, 2027, the company may redeem all or part of the issue for cash.

Holders will have the right to require MicroStrategy to repurchase all or part of their securities on September 15, 2027.

Upon maturity, holders may convert the bonds into cash, MicroStrategy Class A common stock, or a combination thereof at the issuer’s discretion.

The interest rate, initial conversion rate, and other terms will be determined at the time of pricing.

The current issuance will be placed through a private offering to qualified institutional investors, subject to market conditions and other factors.

Earlier, MicroStrategy utilized a similar instrument in March and June 2024. At that time, the company issued two convertible bond offerings worth $600 million and $500 million, raising $700 million in the latter case.

The firm holds 244,800 BTC on its balance sheet, valued at approximately $14.33 billion at the current rate. MicroStrategy last purchased 18,300 BTC in September 2024.

In August, the company’s founder, Michael Saylor, revealed that he personally owns over $1 billion in digital gold.