Key Takeaways
- MicroStrategy announces plans to issue $700M in convertible notes to refinance existing debt and finance additional bitcoin purchases.
- $500M is to be used to redeem a previous tranche of notes while the remainder of the money will be used to buy additional bitcoin.
- The company currently holds a substantial 244,800 bitcoin, valued at approximately $14.2B based on current market prices.
MicroStrategy's Convertible Note Issuance
MicroStrategy announced plans to issue $700M in convertible senior notes, with a due date in 2028.
The company intends to utilize $500M of the proceeds to redeem existing senior secured notes maturing in 2028.
The remaining funds will be allocated for purchasing additional bitcoin and general corporate purposes.
An option will be granted to initial purchasers to buy up to an additional $105M in notes within 13 days of the issuance date.
MicroStrategy plans to have the ability to redeem portions of the notes for cash starting on December 20, 2027.
Bitcoin Acquisition Strategy
Since adopting bitcoin as a reserve asset in 2020, MicroStrategy has emerged as the largest corporate buyer of the Bitcoin.
The firm currently holds a total of 244,800 bitcoin, valued at approximately $14.2B at prevailing market prices.
MicroStrategy recently disclosed a purchase of $1.1B in bitcoin, utilizing funds available from a prior offering.
Other companies, including Semler Scientific and Japan's Metaplanet, have begun to follow MicroStrategy's model by issuing debt to acquire bitcoin.
Market Reaction and Company Performance
MicroStrategy's stock (MSTR) fell 4.9% during regular trading amid a significant drop in bitcoin's price.
In after-hours trading, the shares have declined an additional 1.6%.
Despite the recent downturn, MSTR shares have risen roughly 300% year-over-year.
[Original Article]
