MicroStrategy Increases Convertible Debt Offering by $175 Million, Announces Pricing
Date: 2024-09-19 Author: Henry Casey Categories: BUSINESS
On Wednesday, MicroStrategy, the world’s largest corporate holder of bitcoin, announced that it has increased the principal amount of its convertible senior notes by $175 million, bringing the total amount to $875 million.
MicroStrategy initially announced the sale of $700 million in convertible debt due 2028 on Monday. The proceeds will be used to refinance existing debt and make further bitcoin purchases.
By Wednesday morning, the company confirmed that the offering had increased to $875 million.
MicroStrategy Increases Offering Amid Strong Demand
The notes offer an interest rate of 0.625%, significantly lower than MicroStrategy's previous debt issuances and well below the Federal Reserve's current benchmark rate of 5.25%.
"MicroStrategy has also granted the initial purchasers of the notes an option to purchase up to an additional $135 million of the notes for 13 days from the date of the initial issuance of the notes," the company added.
MicroStrategy's convertible notes offer investors two options: they can either hold the notes to maturity and receive a small income stream, or they can convert the notes into MicroStrategy shares (MSTR) at a predetermined rate.
The conversion rate is set at 5.4589 Class A shares per $1,000, or $183.19 per share, a 40% premium over the current market price.
Investors will be able to convert the notes into shares any time between March 15, 2028, and September 13, 2028, two days before the notes expire.
MicroStrategy's Debt Strategy and Bitcoin Performance
Since the start of its Bitcoin accumulation in 2020, MicroStrategy shares have risen from $140 to a peak of $1,900 in March 2024.
In response to the rising share price, the company split its shares 10-for-1 to make them accessible and liquid to smaller investors.
MicroStrategy’s aggressive debt strategy has allowed the company to accumulate 244,800 BTC, solidifying its position as the largest corporate holder of Bitcoin in the world.
The company’s total investment has grown 53.8% compared to its average purchase price, according to Saylortracker.
Year-to-date, MicroStrategy shareholders have benefited from a 17% increase in “BTC per share” as the company continues to sell shares at a premium to buy additional Bitcoin.
