MicroStrategy proposes $500 million convertible note offering to acquire more bitcoin

MicroStrategy, the business intelligence firm and corporate bitcoin holder, is seeking to raise $500 million via a convertible senior note offering, with an option for an additional $75 million.

Subject to market conditions and other factors, the notes, due 2032, will be issued in a private offering to qualified institutional investors, the company said in a statement on Thursday. They are unsecured, bear interest semi-annually and are convertible into cash, MicroStrategy class A common stock, or both.

MicroStrategy intends to use the funds raised from this offering “to acquire additional bitcoin and for general corporate purposes.”

The convertible notes provide flexibility for MicroStrategy to manage its debt while potentially benefiting from equity appreciation. MicroStrategy has continued to invest heavily in bitcoin since 2020, reflecting its strategy of using debt financing to expand its bitcoin holdings.

MicroStrategy previously proposed a $600 million convertible note offering in March, following a surge in its share price, subsequently purchasing an additional 9,245 BTC that month for $623 million in cash. After two smaller acquisitions in March and April, the firm now holds 214,400 BTC -0.064% for a total cost of $7.54 billion, or $35,180 per bitcoin. MicroStrategy’s bitcoin holdings are valued at $14.5 billion at current bitcoin prices .

MicroStrategy’s share price is currently down 1.5% in pre-market trading at $1,581, according to TradingView. However, the stock has gained more than 30% over the past month and 130% year-to-date.

MSTR/USD price chart. Image: TradingView .

MicroStrategy to redeem $650 million of 2025 convertible notes

In a separate statement on Thursday, MicroStrategy also announced the redemption of $650 million worth of its 2025 convertible senior notes. The redemption will be completed on July 15 at 100% of the principal amount plus accrued interest.

Holders of these notes can convert them into MicroStrategy shares at a rate of 2.5126 shares per $1,000 principal amount, reflecting a conversion price of $397.99 per share. MicroStrategy will settle these conversions entirely in shares of its class A common stock.

MicroStrategy issued $650 million of 0.75% convertible senior notes due in 2025 in December 2020 as part of its strategy to acquire bitcoin and adopt the cryptocurrency as its primary reserve asset.