MicroStrategy Confirms $500M Notes Offering To Buy Bitcoin

MicroStrategy has announced plans to offer $500 million convertible senior notes due in 2032 to institutional investors. 

In the announcement, MicroStrategy said it plans to use the proceeds from these convertible notes to acquire additional Bitcoin. Part of the funds will also go towards general corporate purposes. 

MicroStrategy to Raise $500M In Convertible Notes Offering 

The business intelligence firm, headed by Bitcoin bull Michael Saylor, stated that the convertible senior notes would be the company’s unsecured obligations. The interest on these products will be paid semi-annually on June 15 and December 15. The first interest payment will be on December 15, 2024. 

MicroStrategy has also said that the completion of this offering is subject to market conditions. The firm has also said there are no specifications on the timing and terms of the offering as it is subject to change. 

“From June 20, 2029, MicroStrategy may choose to redeem all or part of the notes for cash, subject to certain conditions,” the firm said. 

MicroStrategy will make the convertible notes available only to institutional investors. These investors can convert the notes to cash or shares in MicroStrategy. This offering seeks to give investors a diverse financial instrument that meets the growth and investment strategy of the company. 

If an investor chooses to convert the notes into cash, $MSTR shares, or both, the conversion rates will be determined by the pricing of the offering. 

The firm further noted that the convertible senior notes and shares resulting from converting the notes will not be registered under the US Securities Act. As such, the notes and stocks will not be available for offer or sale in the US without “registration or an applicable exemption.” 

The sale of these notes will raise more money for MicroStrategy to increase its Bitcoin position. The business intelligence firm currently has a portfolio of 214,400 BTC worth more than $14 billion. 

MicroStrategy Stock Dumps 7% 

MicroStrategy shares dropped 7% on Thursday, indicating that the convertible notes offering has yet to sway investors. The drop coincides with the recent drop in Bitcoin’s price below $67,000. 

During the first quarter of 2024, MicroStrategy posted a net loss of $53.1 million, equivalent to $3.09 per share. The operational expenses on its digital assets during the quarter, including impairment losses, hit $191.6 million. An impairment loss indicates that BTC’s price has plunged below the cost basis. 

Revenues reported during the first quarter dropped 5% year-over-year to $115.2 million. Operating expenses during the same period hit $288.9 million, a staggering 152.8% year-over-year increase from Q1 2023.