American software technology firm MicroStrategy has announced the pricing of a new $700 million debt offering due in 2032.
The company plans to use the proceeds from this offering to purchase more Bitcoin, continuing its aggressive strategy to add the cryptocurrency to its corporate treasury.
Details of the debt offering
According to an official press release, the notes will be sold in a private offering to qualified institutional buyers under Rule 144A of the Securities Act of 1933.
The offering, initially announced at $500 million, has been upsized to $700 million.
MicroStrategy plans to use a portion of the proceeds from this sale to further its Bitcoin acquisitions.
The notes will be unsecured senior obligations of MicroStrategy, bearing interest at a rate of 2.25% per annum.
Interest payments will be made semi-annually in arrears on June 15 and December 15 each year.
The notes are scheduled to mature on June 15, 2032, unless they are repurchased, redeemed, or converted earlier according to their terms.
Financial implications and use of proceeds
MicroStrategy estimates that the net proceeds from the sale will be approximately $687.8 million, after deducting initial purchasers’ discounts, commissions, and estimated offering expenses.
If the initial purchasers exercise their option to purchase additional notes in full, the total proceeds could reach approximately $786 million.
The company intends to use a portion of these funds to continue adding Bitcoin to its corporate treasury.
As of the latest data submitted in its 2024 Q1 financial results, MicroStrategy has acquired 214,400 BTC, with an estimated value of $14 billion.
MicroStrategy’s commitment to Bitcoin
MicroStrategy’s latest move on June 14 follows the firm’s announcement on June 13 of a plan to raise $500 million through a similar offering.
The expansion to $700 million highlights the company’s unwavering commitment to its strategy of bolstering its Bitcoin holdings.
This approach aligns with the company’s reputation as a Bitcoin-maximalist firm, heavily invested in the cryptocurrency market.
It is important to note that the notes being sold under Rule 144A of the Securities Act of 1933 are not officially registered under the United States Securities and Exchange Commission (SEC).
This means that these notes cannot be traded in public markets without meeting specific SEC legal prerequisites, thereby limiting their liquidity.
Strategic positioning in the crypto market
MicroStrategy’s continued investment in Bitcoin reflects its strategic positioning in the cryptocurrency market. The firm’s substantial holdings and ongoing acquisitions underscore its belief in Bitcoin’s long-term value proposition.
By increasing its Bitcoin reserves, MicroStrategy aims to enhance its financial stability and capitalize on potential future gains from the cryptocurrency’s appreciation.
The company’s strategy also positions it as a significant player in the corporate adoption of Bitcoin, potentially influencing other companies to consider similar investments.
MicroStrategy’s aggressive acquisition approach and its high-profile endorsements by CEO Michael Saylor have made it a prominent figure in the Bitcoin community.
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