MicroStrategy upsizes note offering to $2.6 billion to fund Bitcoin acquisition

MicroStrategy has increased its offering of zero-interest convertible senior notes to $2.6 billion, up from the previously announced $1.75 billion, according to a Nov. 20 statement. The company intends to use the net proceeds to fund additional Bitcoin purchases and support general corporate activities.

MicroStrategy expects net proceeds of approximately $2.58 billion from the sale, or $2.97 billion if the initial purchasers exercise their full option.

The notes, due in 2029, will be sold exclusively to qualified institutional buyers and certain non-US persons in compliance with Securities Act regulations. They will be convertible into cash, MicroStrategy’s class A common stock, or a combination of both, at the company’s discretion.

The notes will be unsecured, senior obligations without regular interest, and holders may require MicroStrategy to repurchase them for cash on June 1, 2028, or upon certain fundamental change events. Starting December 4, 2026, MicroStrategy may redeem the notes for cash under specific price conditions for its class A common stock.

The company granted initial purchasers an option to buy up to an additional $400 million in notes within a 3-day period after issuance. The offering is expected to close on November 21, 2024.

Issuing convertible senior notes is part of MicroStrategy’s ongoing strategy to leverage debt financing as a means to accumulate Bitcoin. The company plans to add around $42 billion to its portfolio over the next three years.

Since adopting a Bitcoin reserve strategy in 2020, MicroStrategy has positioned itself as the largest corporate holder of Bitcoin. MicroStrategy’s total Bitcoin holdings now amount to 331,200 BTC, valued at over $30 billion based on current market prices.