MicroStrategy to sell $600 million worth of convertible notes to buy more Bitcoin

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MicroStrategy, the tech giant known for its substantial Bitcoin investments, has announced its plans to offer $600 million in convertible senior notes due 2030, according to a press release published today. The primary objective of this strategic move is to acquire more Bitcoin (BTC) and to support business needs.

“MicroStrategy intends to use the net proceeds from the sale of the notes to acquire additional bitcoin and for general corporate purposes,” the press release wrote.

Convertible senior notes, also known as ‘convertibles,’ are financial securities that function as a loan or investment in an underlying asset, in this case, Bitcoin. Holders of these notes have the option to convert them into common shares of the company.

MicroStrategy’s private offering targets qualified institutional buyers, leveraging Rule 144A under the Securities Act of 1933. The company also expects to provide an option to purchase up to an additional $90 million in notes shortly after the initial issuance.

The notes, set to mature on March 15, 2030, will be unsecured senior obligations of MicroStrategy, accruing interest payable semi-annually. Under certain conditions, the firm may redeem the notes for cash post-March 2027. Noteholders will have the right to demand MicroStrategy repurchase their notes in September 2028. Conversion into cash, shares of MicroStrategy’s class A common stock, or a combination thereof, will be available under specific terms.

The offering will not be registered under the Securities Act or any state securities laws, and as such, will not be offered or sold in the US without registration or an applicable exemption.

“The offer and sale of the notes and the shares of MicroStrategy’s class A common stock issuable upon conversion of the notes, if any, have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction, and the notes and any such shares may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements. Any offer of the notes will be made only by means of a private offering memorandum,” said the press release.

MicroStrategy previously announced its plans to raise $600 million through convertible notes in February 2021, also to purchase Bitcoin. The firm has been a vocal advocate for Bitcoin and currently holds 193,000 BTC, equivalent to around $8.3 billion at Bitcoin’s current prices.

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