MicroStrategy to Raise $700M via Convertible Note Sale, Eyeing Bitcoin Growth

MicroStrategy recently added 18,300 BTC to its holdings, bringing its total to 244,800 BTC, purchased at an average price of $38,585 per BTC.

Multinational software company MicroStrategy announced Tuesday that it will sell $700 million of convertible notes, with the net proceeds going to repay debts and add Bitcoin (BTC) to its balance sheet.

The new offering, which will mature in 2028, is the latest effort by the firm to fortify its balance sheet while continuing to hold Bitcoin as a primary treasury asset.

As per the September 17 announcement, under Rule 144A, institutional investors are now able to purchase MicroStrategy’s $700 million convertible senior notes offering.

MicroStrategy Announces Proposed Private Offering of $700M of Convertible Senior Notes $MSTR https://t.co/OCq7wj2u0P

— Michael Saylor (@saylor) September 16, 2024

The company has also given investors the option to buy up to $105 million more of notes within 13 days from the issue date. The 2028 notes will pay interest semi-annually and be convertible into cash, MicroStrategy class A shares, or a combination of the two.

Proceeds from the sale will be used to pay down part of MicroStrategy’s existing $500 million worth of 6.125% senior secured notes due 2028.

Upon redemption, the company will release about 69,080 Bitcoins as collateral for that debt. These funds will be used for general corporate purposes in addition to the up-BTC purchases. MicroStrategy is expected to use the remaining proceeds from the note sale to buy more # Bitcoin.

MicroStrategy to Keep Bitcoin Strategy

Although this note sale is mostly a debt play, it is also part of MicroStrategy’s larger Bitcoin corporate strategy. Only three days before that, on September 14, the firm announced it had bought an additional 18,300 BTC worth around $1.11 billion. The company now holds 1.2% of the total Bitcoin circulating supply.

With its new convertible note offering, MicroStrategy plans to refinance its senior secured notes to improve its debt structure and lower the cost of capital. The notes-to-cash and stock options provide the company with flexibility to address both its debt load and shareholder value.

Better yet, MicroStrategy’s willingness to take on debt in order to build up a position in Bitcoin contrasts sharply with any fear of fluctuating market prices. CEO Michael Saylor has earned a reputation for the large role he sees Bitcoin playing as a store of value over the long haul — leading it to become central in MicroStrategy’s treasury plan.

Given strong institutional demand for its notes and Bitcoin, MicroStrategy is setting the stage to maintain its position as a top dog in corporate Bitcoin adoption. MicroStrategy will continue to lead the changing cryptocurrency market by utilizing convertible notes to clean up its balance sheet and increase its Bitcoin assets.

That said, as the company looks to the future, its combination of traditional fintech traction and new-age Bitcoin promotion could provide an inspiration roadmap for underlying firms employing comparable strategies.