MicroStrategy has expanded its convertible senior notes offering from an initially planned $500 million to $700 million. These notes, due in 2032, will carry an annual interest rate of 2.25%.
Convertible Notes to Shares
According to the company’s announcement, investors can convert the notes into MicroStrategy stock. The initial conversion rate is 0.4894 shares per $1,000 of notes. This rate translates to a conversion price of approximately $2,043.32 per share, which is 35% higher than the average trading price of $1,513.46 on June 13, 2024. Therefore, this conversion option offers potential additional value if MicroStrategy’s stock price increases.
Interest and Maturity Details
Interest payments on these notes are scheduled twice a year, starting on December 15, 2024. The notes will mature on June 15, 2032, requiring MicroStrategy to repay the loan by this date unless earlier conversion into stock occurs. Additionally, starting June 20, 2029, MicroStrategy can opt to repurchase the notes for cash if its stock price reaches at least 130% of the conversion price.
Fundraising and Bitcoin Acquisition
MicroStrategy anticipates raising approximately $687.8 million from this sale. This amount could reach up to $786 million if additional notes are purchased. The proceeds will be used to acquire more Bitcoin for the company’s treasury.
By expanding the offering and setting favorable conversion terms, MicroStrategy aims to leverage investor interest. This strategy will bolster its Bitcoin holdings, reflecting its continued confidence in the cryptocurrency’s future growth.
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