MicroStrategy has unveiled intentions to boost its sale of convertible notes from $600 million to $700 million, with the aim of leveraging the prevailing cryptocurrency bull market.
The notes, slated for 2030, will carry a nominal interest rate of 0.625% annually and a conversion price of $1,497.68 per share. This conversion price represents a 21% premium over its current share price of $1,234.48, as of the announcement made on March 6.
Details and terms of the note sale
The sale targets accredited or institutional investors, underlining MicroStrategy’s strategy to engage sophisticated financial backers. Additionally, the terms include provisions for note holders to demand repurchase by MicroStrategy on specific dates or upon certain fundamental changes, ensuring a repurchase price of 100% of the principal amount plus any accrued interest.
MicroStrategy expects to raise approximately $684.3 million from the note sale, with the potential to increase to $782.0 million if all purchase options are exercised. The company intends to utilize the proceeds to acquire more Bitcoin or cover corporate expenses. Currently, MicroStrategy holds around 193,000 BTC, purchased at an average price of $31,544, valued at $12.9 billion and representing a 112% return on investment. This strategic investment has contributed to a 429.2% return in the company’s stock, mirroring the broader Bitcoin market’s performance.
Michael Saylor, MicroStrategy’s chairman and co-founder, has been a vocal advocate of Bitcoin, incorporating it into the company’s asset allocation strategy since August 2020. The company has consistently added Bitcoin to its treasury in subsequent quarters, reaffirming its commitment to the cryptocurrency as a fundamental element of its financial strategy.