As a seasoned analyst with over two decades of experience in the financial markets, I’ve witnessed countless debt offerings and corporate strategies. However, MicroStrategy’s relentless pursuit of Bitcoin seems to be a unique case.
On September 16th, Michael Saylor, the founder of MicroStrategy, disclosed their intentions for a third bond sale in 2021, targeting a fundraising goal of approximately $700 million through the issuance of convertible senior notes.
The figure is the aggregate principal amount, and there is an option for an additional $105 million in notes that mature in September 2028.
Buying More Bitcoins
The company announced its plan to apply the funds raised from this issue towards settling current debts and retiring $500 million worth of matured senior secured bonds.
MicroStrategy Announces Proposed Private Offering of $700M of Convertible Senior Notes $MSTR
— Michael Saylor (@saylor) September 16, 2024
The business announced that a portion of the funds raised will be utilized to buy more Bitcoin, demonstrating their dedication to their Bitcoin plan. Any remaining funds from the profits will be used “for buying additional Bitcoin and general corporate needs,” they added.
Chairman and CEO at Marathon Digital Holdings, Fried Thiel, commented:
“Well, that’s another 12,500 BTC less for the rest of us to acquire…”
In a casual, understandable manner: Financial critic Peter Schiff expressed exasperation by saying “Here we go again,” followed by questioning, “What happens when MicroStrategy (MSTR) is the last buyer standing? At some point, there’s a limit to how much debt MSTR can accumulate to prevent the tower from toppling.
As an analyst, I can express this in a more conversational manner like so: “I’m in the process of releasing around 69,080 Bitcoins that have been held as security for our senior notes, following their redemption.
Convertible Senior Notes represent a specific category of debt instruments that can transform into a specified number of the issuer’s common shares at designated periods throughout the bond’s lifetime. These financial tools are referred to as “senior” debts because they hold precedence over other types of debt during bankruptcy proceedings.
In 2024, MicroStrategy made its third bond issuance this year. Previously, the company secured approximately $700 million through a similar offering in March, and another $500 million in June.
MicroStrategy BTC Holdings
At the present market value, MicroStrategy owns approximately 244,800 Bitcoins, which equate to a staggering $14.24 billion. Notably, their recent purchase involved 18,300 BTC, valued at around $1.1 billion, as reported on September 13th.
Based on information from the Saylor Tracker site, the company’s average investment cost for each Bitcoin (BTC) is approximately $38,781. This means they have an estimated total unrealized gain of nearly 50% across all their Bitcoin purchases.
On Monday, the company’s stock (MSTR) dropped by 4.9%, closing at $134.50 as per Google Finance data.
Over the past few months, the price trend of MicroStrategy shares has generally followed that of Bitcoin, peaking in March but experiencing a drop by about 30% ever since. At present, Bitcoin is trading approximately 21.3% lower than its March high point.
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2024-09-17 09:32