MicroStrategy (MSTR), a prominent player in the business analytics software industry, has unveiled its intention to raise $600 million through convertible senior notes due 2030. This move is part of the company’s aggressive strategy to acquire more bitcoin, bolstering its position as a leading corporate holder of the digital currency.
Convertible Senior Notes for Bitcoin Purchase
In a recent announcement, MicroStrategy that describing itself as “world’s first Bitcoin development company” disclosed its plan to issue $600 million in convertible senior notes, with a provision to increase the offering by an additional $90 million. These notes, which are set to mature on March 15, 2030, will be offered to qualified institutional buyers. The firm intends to use the proceeds from this offering to “acquire additional bitcoin and for general corporate purposes”.
The company stated:
“The notes will be unsecured, senior obligations of Microstrategy and will bear interest payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2024. The notes will mature on March 15, 2030, unless earlier repurchased, redeemed, or converted in accordance with their terms […] Microstrategy intends to use the net proceeds from the sale of the notes to acquire additional bitcoin and for general corporate purposes.”
According to the firm, “The interest rate, conversion rate, conversion price, and certain other terms of the notes will be determined at the time of pricing of the offering.” This move follows a similar strategy employed by the company in early 2021 when it raised $600 million through convertible senior notes to purchase Bitcoin.
Bitcoin Accumulation Strategy
Saylor company’s aggressive stance towards bitcoin accumulation is evident in its continuous efforts to amass the scarce digital asset. The company sees Bitcoin as a primary treasury reserve asset and has been using its cash flows and proceeds from equity and debt financings to build its bitcoin holdings.
The firm, led by its founder and executive chairman, Michael Saylor, has been vocal about its bullish outlook on Bitcoin. Saylor believes that Bitcoin has become the world’s most popular investment asset and has consistently advocated for its adoption.
Market Performance and Outlook
MicroStrategy’s stock has outperformed Bitcoin year-to-date, rising by a significant margin. MSTR stock has surged by 130% in February, compared to a 50% rise for Bitcoin during the same period. According to BitcoinTreasuries, the company presently possesses 193,000 bitcoin, which are valued at approximately $12 billion based on the current market prices.
The announcement of the convertible notes offering coincides with a surge in bitcoin prices, with the digital asset approaching its all-time high. This indicates a bullish sentiment towards Bitcoin, both from institutional investors like MicroStrategy and retail investors.
MicroStrategy’s latest move to raise $600 million through convertible notes reaffirms its commitment to Bitcoin and its belief in the long-term potential of the scarce digital currency. As the company continues to accumulate bitcoin, it not only strengthens its position in the market but also contributes to the broader adoption and innovation of Bitcoin as a digital asset.
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