MicroStrategy has unveiled plans for a $500 million stock sale aimed at funding additional Bitcoin acquisitions, reinforcing its commitment to BTC as a treasury reserve asset.
$500 Million Convertible Senior Notes Offering
MicroStrategy plans to offer $500 million in convertible senior notes due in 2032. This private offering will be available to qualified institutional buyers under Rule 144A of the Securities Act of 1933, and is contingent on market conditions and other factors.
”The notes will be unsecured, senior obligations of MicroStrategy and will bear interest payable semi-annually in arrears on June 15 and December 15 of each year, starting on December 15, 2024. The notes will mature on June 15, 2032, unless earlier repurchased, redeemed, or converted in accordance with their terms,” the company announced.
Use of Proceeds and Strategic Goals
According to a press release, the net proceeds from this offering will primarily be used to acquire additional Bitcoin and for general corporate purposes. Despite market conditions, this move aligns with MicroStrategy’s long-term strategy of using Bitcoin as its primary treasury reserve asset.
Details of the Private Offering
MicroStrategy also expects to grant initial purchasers an option to buy an additional $75 million in aggregate principal amount of the notes.
”If MicroStrategy redeems fewer than all the outstanding notes, at least $75 million aggregate principal amount of notes must be outstanding and not subject to redemption as of the relevant redemption notice date,” the press release stated.
The interest rate, initial conversion rate, and other terms of the notes will be determined at the time of pricing the offering. ”MicroStrategy expects that the reference price used to calculate the initial conversion price for the notes will be the U.S. composite volume-weighted average price of MicroStrategy’s class A common stock from 9:30 am through 4:00 pm EDT on the date of pricing,” the company added.
Regulatory Considerations
The notes will be offered and sold to qualified purchasers under Rule 144A of the Securities Act of 1933, meaning they will not be registered under the Securities and Exchange Commission (SEC). Consequently, these convertible senior notes and any convertible shares of MicroStrategy’s class A common stock cannot be sold or bought in public markets without meeting specific legal conditions.
Featured image from: cointelegraph.com