July 24, 2024
MicroStrategy convertible senior notes
Bitcoin News

MicroStrategy to Issue $500M in Convertible Senior Notes

Private Offering Details

MicroStrategy has announced its intention to issue $500 million in convertible senior notes, set to mature in 2032. This private offering is designed for qualified institutional buyers and will adhere to Rule 144A of the Securities Act of 1933. The issuance is subject to market conditions and other factors.

According to a press release, “The notes will be unsecured senior obligations of MicroStrategy and will bear interest payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2024. The notes will mature on June 15, 2032, unless earlier repurchased, redeemed, or converted in accordance with their terms.” The primary use of the net proceeds will be to acquire additional Bitcoin and support general corporate purposes. This move aligns with MicroStrategy’s long-term goal of using Bitcoin as its treasury reserve asset.

Commitment to Bitcoin Development

MicroStrategy identifies itself as “the world’s first Bitcoin development company” and remains dedicated to the continued enhancement of the Bitcoin network. The company plans to give initial purchasers an option to buy an additional $75 million in aggregate principal amount of the notes. “If MicroStrategy redeems fewer than all the outstanding notes, at least $75 million of the aggregate principal amount of notes must be outstanding and not subject to redemption as of the relevant redemption notice date.”

The specifics of the notes, including the interest rate and initial conversion rate, will be determined at the time of pricing. “MicroStrategy expects that the reference price used to calculate the initial conversion price for the notes will be the U.S. composite volume weighted average price of MicroStrategy’s class A common stock from 9:30 a.m. through 4:00 p.m. EDT on the date of pricing,” stated the press release.

Regulatory Considerations

The notes will be offered under Rule 144A of the Securities Act of 1933, meaning they will be sold to qualified purchasers without being registered with the Securities and Exchange Commission (SEC). Consequently, these convertible senior notes and any related shares of MicroStrategy’s class A common stock cannot be traded on public markets unless specific legal conditions are met.

Future Aims

MicroStrategy’s decision to offer $500 million in convertible senior notes highlights its strategic commitment to Bitcoin. By leveraging these notes, the company aims to increase its Bitcoin holdings and fund general corporate activities, reinforcing its pioneering role in Bitcoin development. Despite regulatory and market dependencies, MicroStrategy continues to align its financial strategies with its long-term vision of integrating Bitcoin into its corporate treasury.

Disclosure Statement: Miami Crypto does not take any external funding, or support to bring crypto news to the readers. We do not have any conflicts of interest while writing news stories on Miami Crypto.

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