MicroStrategy Convertible Notes Continues Boosted to Raise $2.6B

Key Points:

• MicroStrategy increased its offering of 0% convertible senior notes to $2.6 billion, up from $1.75 billion.
• The MicroStrategy convertible notes, maturing in 2029, carry no regular interest and allow redemption or repurchase under specific conditions.
• The company plans to use the proceeds primarily to acquire more Bitcoin and for general corporate purposes.

MicroStrategy announced the pricing of its upsized offering of $2.6 billion in 0% convertible senior notes due 2029.

Read more: MicroStrategy Convertible Senior Notes Worth $700 Million Offered at 2.25% Interest

MicroStrategy Convertible Note Offering Upsized to $2.6 Billion

The private offering was initially planned at $1.75 billion and is expected to close on November 21, 2024, pending customary conditions. The MicroStrategy convertible notes are being sold to qualified institutional buyers under the Securities Act.

The offering also involves the option for initial purchasers to purchase an additional $400 million in notes within three days of the issuance date. At full exercise, gross proceeds would reach $2.97 billion and net proceeds of approximately $2.58 billion after deducting discounts and expenses.

Proceeds Intended for Bitcoin Purchases and Corporate Purposes

The MicroStrategy convertible notes consist of unsecured senior obligations and would not bear regular interest and accrete in value. These will mature on December 1, 2029, and are subject to redemption from December 4, 2026, contingent upon certain conditions.

The redemption will be triggered when the company’s class A common stock trades at least 130% above the conversion price over a specified period. In the event that less than all of the notes are redeemed, at least $75 million in aggregate principal should remain outstanding.

MicroStrategy intends to use the net proceeds from the sale of the notes to buy additional Bitcoin, as stated in its corporate strategy, and for general purposes. The company recently increased its Bitcoin reserves to 331,200 BTC in the latest purchase.