MicroStrategy has unveiled the pricing for its offering of convertible senior notes totaling $700 million. This revelation follows the initial announcement of a $500 million offering, with the latest press release indicating an increase to $700 million in total principal amount of notes. The company expects the offering to be completed on June 17, 2024.
The notes, classified as unsecured senior obligations of MicroStrategy, will accrue interest at a rate of 2.25% per year, with payments made semi-annually on June 15 and December 15 of each year, starting from December 15, 2024. The notes are set to mature on June 15, 2032, barring any early repurchase, redemption, or conversion.
In a statement released on June 14, MicroStrategy disclosed that the conversion rate for the notes is established at 0.4894 shares of MicroStrategy’s class A common stock per $1,000 principal amount of notes. This equates to approximately $2,043.32 per share, representing a 35% premium over the U.S. composite volume-weighted average price (VWAP) of the company’s stock on Thursday, June 13, 2024, which was $1,513.46.
MicroStrategy also mentioned that the $700 million raise includes an option for qualified institutional buyers to acquire an additional $100 million. The initial offer on June 13 had indicated an opportunity for an extra $75 million of the total principal amount.
Furthermore, in a separate announcement on Thursday, MicroStrategy revealed its plans to redeem $650 million of convertible notes due in 2025, with all conversion requests to be settled in shares. The redemption date for this transaction is slated for July 15, 2024.
With expectations of raising a total of $687.8 million, or potentially up to $786.0 million if initial buyers exercise their option in full, MicroStrategy intends to utilize the proceeds from the notes offering to acquire more Bitcoin (BTC). The company currently holds 214,400 BTC, the largest reserve of any corporate entity apart from the significant amount backing BlackRock’s spot ETF.