MicroStrategy Ups Convertible Note Offering to $700M for Bitcoin Purchases

By: Isha Das

MicroStrategy has announced an increase in its convertible senior notes offering from an initially planned $500 million to $700 million. According to the company's statement, investors will be able to convert these notes into shares of MicroStrategy's stock. The notes will pay an annual interest rate of 2.25% and are due in 2032.

The initial conversion rate of the notes is set at 0.4894 shares per $1,000 of notes, which amounts to a conversion price of approximately $2,043.32 per share. This conversion price is 35% higher than the average trading price of MicroStrategy's stock as of June 13, 2024, which was $1,513.46. Thus, there is potential added value for investors if MicroStrategy's stock price increases.

Interest payments on these notes will be made twice a year, beginning on December 15, 2024. The notes will mature on June 15, 2032, by which date MicroStrategy must repay the loan unless the notes are converted into stock earlier. From June 20, 2029, MicroStrategy will also have the option to buy back the notes for cash if its stock price reaches at least 130% of the conversion price.

MicroStrategy expects to raise around $687.8 million from this note sale, or up to $786 million if additional notes are purchased. The proceeds from this issuance will be used primarily to acquire more Bitcoin for its treasury and to fund general corporate operations. Michael Saylor's firm already holds about $14.3 billion worth of Bitcoin, underscoring its commitment to expanding its cryptocurrency holdings.