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Michael Saylor’s MicroStrategy Plans Another $700M Convertible Note Issuance

Sep 16, 2024
  • MicroStrategy proposed to issue $700 million of convertible senior notes, with $500 million to be used to redeem a previous tranche of notes.
  • The remainder of the money could be used to buy additional bitcoin.
As a seasoned crypto investor with a keen eye for market trends and company strategies, I find MicroStrategy’s latest move to be a shrewd one, especially considering their history of Bitcoin investments under the leadership of Michael Saylor. The decision to issue convertible senior notes, using the proceeds to redeem an earlier tranche and potentially buy more BTC, is a strategic maneuver that showcases MicroStrategy’s commitment to bitcoin as a treasury reserve asset.On Monday, the publicly traded bitcoin technology company MicroStrategy (MSTR) disclosed its plan to issue $700 million in total value of convertible senior notes maturing in 2028.
According to a recent announcement, the company intends to apply the funds raised from this offering towards repaying $500 million worth of senior notes carrying an annual interest rate of 6.125% due in 2028. Remaining proceeds will be allocated for further bitcoin (BTC) acquisitions and general business purposes.

The company intends to give the initial buyers of these notes the ability to purchase an extra $105 million worth of notes within a 13-day window, starting from the date when the first notes are issued. Additionally, they stated that they might choose to redeem all or part of the notes with cash, starting from December 20, 2027, but only under specific conditions.

Under the guidance of its Executive Chairman Michael Saylor, the company began acquiring bitcoin in 2020, treating it as a reserve asset for its treasury. Since that time, it has emerged as the biggest corporate investor in bitcoin, amassing approximately 244,800 BTC, which is equivalent to around $14.2 billion at present prices. Not too long ago, MicroStrategy announced another purchase of bitcoin worth about $1.1 billion, leaving it with $900 million still available under a prior offer.

More recently, similar to MicroStrategy, other corporations like Semler Scientific and the Japanese investment firm Metaplanet have chosen to borrow money in order to buy bitcoins.

MSTR shares slid 4.9% during regular trading today alongside a sizable decline in the price of bitcoin. Shares are down another 1.6% in after hours trading. They remain higher by about 300% on a year-over-year basis.

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2024-09-17 00:17