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Bullish MicroStrategy Increases its Bitcoin Offering to $550 Million

In its bid to acquire more bitcoin, MicroStrategy has announced that it will sell up to $550 million convertible senior notes to fund the asset’s purchase. 

The business intelligence firm said today in a press release that the convertible notes will be sold to qualified institutional buyers in a private offering, following Rule 144A under the U.S. Securities Act of 1933. 

According to the announcement, the $550 million offerings scheduled to close on December 11, 2020, have an annual interest rate of 0.75%. 

From June 2021, the interests will be paid semi-annually to investors on June 15 and December 15 yearly. 

MicroStrategy noted that the note would mature on December 15, 2025, unless it is earlier repurchased, redeemed, or converted in line with investors’ terms. 

Per the announcement, the firm can convert the notes into cash, MicroStrategy’s class A shares, or a combination of the two during its election. 

However, the firm can convert the notes before election periods based on certain events that may occur at any time.  

The notes’ conversion ratio will be set at 2.5126 shares of MicroStrategy’s class A common stock per $1,000 principal amount of notes, equivalent to about $397.99 per share.  The amount represents approximately 37.5% premium of MicroStrategy’s class A stock closing price of $289 reported yesterday. 

Net profit from the note sales is estimated at $537.2 million or approximately $634.9 million if initial buyers exercise the rights of purchasing additional notes.  

“MicroStrategy intends to invest the net proceeds from the sale of the notes in bitcoin in accordance with its Treasury Reserve Policy,” the press release reads. 

Since MicroStrategy announced plans to hold BTC as part of its cash reserve, it has not looked back on its promise. 

Few days after the announcement, MicroStrategy purchased 21,454 bitcoins and another 16,796 the following month, bringing its holding of the asset to 38,250 bitcoin. 

Not satisfied with the amount of BTC it has in its possession, MicroStrategy purchased another 2,574 bitcoins, which brought the company’s total holding of the asset to a groundbreaking 40,824 BTC. 

 

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