MicroStrategy Proposes to Offer $500M Convertible Senior Notes to Buy More Bitcoin

MicroStrategy announced plans to raise $500 million through a convertible senior note offering. This initiative, which includes an option for an additional $75 million, is aimed at purchasing more bitcoin. The company revealed this strategy in a statement on Thursday.

The convertible senior notes, due in 2032, will be issued in a private offering to qualified institutional investors. These notes are unsecured, senior obligations of MicroStrategy, and will bear interest semi-annually, starting December 15, 2024. Investors can convert the notes into cash, MicroStrategy class A common stock, or a combination of both.

The offering is subject to market conditions, and its completion is not guaranteed, according to the announcement. The notes provide MicroStrategy with the flexibility to manage its debt while potentially benefiting from equity appreciation. The company may redeem the notes for cash, fully or partially, after June 20, 2029, subject to specific conditions.

Strategic Bitcoin Acquisition

MicroStrategy has been heavily investing in Bitcoin since 2020, using debt financing to expand its holdings. The firm previously proposed a $600 million convertible note offering in March, which led to the acquisition of an additional 9,245 BTC for $623 million in cash.

Further, the software giant closed its acquisition of 12,000 additional bitcoins (BTC) for $821.7 million, at $68,477 per coin on March 11. Similarly, this acquisition was made possible by the funds raised through the company's recent convertible debt offering. 

Currently, MicroStrategy holds 214,400 BTC, acquired at a total cost of $7.54 billion, or $35,180 per Bitcoin. With bitcoin's current prices, these holdings are valued at $14.5 billion, making MicroStrategy the largest public-listed bitcoin holder.

Redemption of 2025 Convertible Notes

MicroStrategy also announced the redemption of $650 million worth of its 2025 convertible senior notes. This redemption will occur on July 15, at 100% of the principal amount plus accrued interest. 

The holders of these notes can convert the notes into MicroStrategy shares at a conversion rate of 2.5126 shares per $1,000 principal amount, and the conversion price is $397.99 per share.