MicroStrategy Expands Convertible Offering to Boost Bitcoin Holdings
By: Eliza Bennet
MicroStrategy, a prominent business intelligence firm, has announced a significant increase in its convertible debt offering, now targeting $2.6 billion, up from an initial $1.75 billion. This strategic financial move is aimed at further augmenting the company’s Bitcoin acquisitions while also attending to other corporate needs. MicroStrategy's board has structured this offering by floating convertible notes privately to institutional investors under Rule 144A of the Securities Act of 1933, and to select non-U.S. buyers under Regulation S. Additionally, the firm has provided buyers with a three-day option to purchase an additional $400 million in notes.
The convertible notes, integral to this fundraising effort, are classified as unsecured senior obligations set to mature on December 1, 2029. An intriguing aspect of these notes is their lack of regular interest, compounded by non-accreting principal obligations. The conversion rate established for these notes is 1.4872 shares of MicroStrategy Class A common stock per $1,000 of principal, which translates to a conversion price of $672.40 per share. This represents a 55% premium over the average price of $433.80 as of November 19. The conversion terms are subject to adjustment based on predefined events.
MicroStrategy expects net proceeds amounting to $2.58 billion after expenses. However, proceeds could rise to $2.97 billion if the option to purchase additional notes is fully exercised. This monetary inflow aligns with the company’s rise to the top 100 U.S. publicly traded companies, now ranking 97th as per CompaniesMarketCap data. Contributing to this ascension is MicroStrategy’s stellar stock performance, which soared approximately 100% throughout the preceding month, reaching a two-decade peak of over $430. Interestingly, this performance is now rivaling the stocks of notable AI firms such as Nvidia.
As per current market indications, the trend appears to be enduring, with a pre-market trading increase of about 8% reported by Google Finance. MicroStrategy remains the largest holder of Bitcoin among public companies, boasting over 330,000 BTC valued in excess of $30 billion. In the current year alone, the firm has acquired nearly 150,000 BTC, reinforcing its pioneering role in corporate Bitcoin adoption.
