Michael Saylor, founder of MicroStrategy, a U.S.- listed company that dominates Bitcoin, announced on Monday plans to sell convertible senior bonds worth up to $700 million. This is the company’s third issuance of corporate bonds in 2024.
In the official announcement yesterday (18th), MicroStrategy increased the total amount to US$875 million. It is understood that the convertible bonds will mature in 2028, with an interest rate of 0.625%, and are intended for institutional investors.
Micro-strategy adds to Bitcoin position
MicroStrategy explained in the announcement that the convertible senior bonds issued this time will meet the following basic conditions:
- It is an unsecured senior bond, with interest payable semi-annually starting from March 15, 2025;
- On or after December 20, 2027, MicroStrategy may redeem all or any share of the bonds for cash;
- Before March 15, 2028, the convertible bonds can only be redeemed when specific events occur and within a specific time, and can be redeemed at any time after maturity;
- The initial conversion rate for these convertible bonds is 5.4589 MicroStrategy Class A shares per $1,000 of convertible bonds.
MicroStrategy continued to point out that after deducting commissions and issuance fees from these convertible bonds, MicroStrategy can earn approximately US$864.1 million in income. More importantly, in addition to the fact that these funds will be used to redeem the US$500 million convertible bonds previously issued by MicroStrategy that will also mature in 2028, the remaining funds will also be used to continue to increase positions in Bitcoin:
MicroStrategy intends to use the net proceeds from the offering to redeem $500 million of MicroStrategy's convertible senior notes due 2028 and to use any balance of the net proceeds to purchase additional Bitcoin and for general corporate purposes.
MicroStrategy stock price rises slightly
Just after MicroStrategy announced the bond issuance, Bitcoin also exceeded $62,000 this morning. Benefiting from this, MicroStrategy's share price rose again by 2.31% to $135.74 after the market closed.
MicroStrategy’s Bitcoin holdings reach $14.6 billion
Although Bitcoin has been sluggish in recent months, micro-strategies have continued to add positions. According to the latest statistics from Bitcointreasuries , MicroStrategy’s current Bitcoin holdings have increased from 214,400 BTC in June this year to the current 244,800 BTC, with a total capital cost of US$9.45 billion. The total value of the positions is currently as high as US$15.1 billion. Achieved profit of US$5.65 billion.
Although a large part of the convertible bonds will be used for repayment after the successful fundraising this time, MicroStrategy still stated that it will continue to increase its position in Bitcoin, and the day when the position exceeds 250,000 BTC may come soon.
