MicroStrategy Expands Convertible Bond Offering to $700 Million to Fuel Bitcoin Acquisitions – MicroStrategy (NASDAQ:MSTR)

Micro-strategy MSTR on Friday announced an increase in its offering of convertible senior notes to $700 million from the previously planned $500 million.

These notes, which mature in 2032, will be sold in a private placement to institutional investors pursuant to Rule 144A of the Securities Act of 1933, according to the company.

Details of offer

The notes bear an interest rate of 2.25% per annum and will be sold to qualified institutional buyers. Interest will be payable semi-annually on June 15 and December 15, starting December 15, 2024.

The offering, which is expected to close on June 17, 2024, includes an option for initial purchasers to purchase an additional $100 million of notes within 13 days of the issuance date.

CEO of MicroStrategy, Michael Sayloremphasized the strategic importance of this offering: “This move is consistent with our ongoing commitment to leverage our financial strategies to acquire more Bitcoin and support the growth of our company.”

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Terms of convertible bonds

The MicroStrategy Class A common stock convertible notes, or a combination thereof, will mature on June 15, 2032, unless earlier redeemed, repurchased or converted.

As of June 20, 2029, MicroStrategy may convert promissory notes into cash provided that the share price exceeds 130% of the conversion price.

The initial conversion rate is 0.4894 shares per $1,000 principal amount, representing a conversion price of approximately $2,043.32 per share, which represents a 35% premium to the June 13, 2024 closing price of $1,513.46.

Use of proceeds

The company expects net proceeds of approximately $687.8 million, or $786.0 million if additional notes are purchased.

MicroStrategy intends to use these funds primarily to acquire more Bitcoin and for general corporate purposes.

Insights on MicroStrategy and the broader implications for the digital asset market will be discussed at Benzinga’s Future of Digital Assets event on November 19.

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