To obtain more bitcoin, MicroStrategy suggests a $500 million convertible note sale

  • The $500 million convertible senior note issue that MicroStrategy has suggested would be used for both general corporate purposes and the purchase of more bitcoin.
  • The company, which now owns 214,400 Bitcoin, also declared the redemption of $650 million of its senior notes that are convertible in 2025.

The business intelligence company MicroStrategy, which also owns corporate bitcoin, is looking to raise $500 million through the issuance of convertible senior notes, with the opportunity to purchase an additional $75 million.

The notes, which are due in 2032, will be issued in a private offering to accredited institutional investors, the business said in a statement on Thursday. This is subject to market circumstances and other variables. They are convertible into cash, MicroStrategy class A common stock, or both, and are unsecured. They also bear interest semi-annually.

MicroStrategy plans to purchase more bitcoin with the proceeds from this transaction, in addition to using the money for normal business needs.

MicroStrategy can manage its debt more freely thanks to the convertible notes, which also provide it the chance to gain from possible stock appreciation. Since 2020, MicroStrategy has made significant investments in bitcoin, which is consistent with its goal of utilizing debt financing to increase its holdings of the cryptocurrency.

After a spike in its share price in March, MicroStrategy had earlier announced plans to offer $600 million in convertible notes. Later that month, the company bought an extra 9,245 Bitcoin for $623 million in cash. The company currently owns 214,400 for a total cost of $7.54 billion, or $35,180 per bitcoin, following two smaller buys in March and April. At today’s values, MicroStrategy’s bitcoin assets are worth $14.5 billion.

According to TradingView, the share price of MicroStrategy is currently down 1.5% at $1,581 in pre-market activity. Nonetheless, the stock has increased by more than 30% in the last month and 130% so far this year.

Redeeming $650 million in 2025 convertible notes is part of MicroStrategy

MicroStrategy also stated in a separate statement on Thursday that $650 million worth of its 2025 convertible senior notes had been redeemed. On July 15, the redemption will be finalized at 100% of the principle amount plus interest that has accumulated.

At a conversion price of $397.99 per share, holders of these notes can exchange them for MicroStrategy shares at a rate of 2.5126 shares per $1,000 principal amount. All of MicroStrategy’s conversion payments will be made in shares of its class A common stock.

In December 2020, MicroStrategy released $650 million in convertible senior notes with a maturity date of 2025. This was a part of the company’s plan to buy Bitcoin and use it as its main reserve asset.

Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.

Author: Puskar Pande

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