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Michael Saylor has announced a MicroStrategy Convertible Notes offering due 2029 to help the firm acquire more Bitcoins. Buyers can convert the notes into cash, MSTR class A common stock, or a combination of both options.
According to the announcement, the company aims to raise at least $1.75 billion by offering zero-interest MicroStrategy convertible notes to qualified institutional buyers. Initial purchasers could also qualify for an additional $250 million.
MicroStrategy Convertible Notes Offering for Institutional Buyers
As per the blog post, the company will offer the senior MicroStrategy notes offering as zero-coupon convertibles as they won’t have an annual interest rate. The world’s largest corporate Bitcoin holder will use the proceeds of the offering to purchase more Bitcoin for its corporate purposes. The MicroStrategy Convertible Notes offering is open to institutional players and selected non-US buyers.
Convertible senior notes refer to debt security that an investor can convert into cash or a share of the company stock. The instrument allows an investor to benefit from the projected growth of a stock’s price while benefiting from downside protection through fixed payments. In the case of the MicroStrategy Convertible Notes offering, buyers won’t shoulder regular interest or increase over time, making it a zero-coupon offering. When the offering comes to maturity, investors can choose between converting their motes into cash, a share of the MSTR stock, or a combination of both.
Instrument Fit for Companies with Impressive Stock Performance
The latest MicroStrategy convertible notes offering that matures in December 2029 comes after the firm made a similar debt issuance for an $875 million convertible senior note offering in September 2028 and another one in June 2024, both of which will mature in 2032. By using convertible notes, the company has effectively managed to access low-interest or interest-free capital, which it has repeatedly used to buy additional Bitcoin.
MicroStrategy is betting on the possibility of Bitcoin’s price skyrocketing in subsequent market cycles. The provision that convertible notes offer investors to convert debt into a company’s shares is an attractive feature especially when a company has an impressive stock performance.
While the statement didn’t offer specific details concerning asset maturation or the company’s right to redeem the notes, MicroStrategy highlighted that firm’s commitment to run a Bitcoin-first strategy. The firm’s enhanced Bitcoin buying strategy seems to come at the right time following the victory of a pro-crypto Donald Trump, who has pledged to “Make America the Cryptocurrency and Bitcoin capital of the world. The firm stated further in the statement that they “intend to use the net proceeds from this offering to acquire additional Bitcoin and for general corporate purposes.”
MicroStrategy’s Bitcoin Buying Spree
The MicroStrategy Convertible Notes offering as a fundraising strategy follows a recent acquisition of Bitcoin worth $4.6 billion which brings the firm’s total holdings to 331,200 BTC worth at least $30 billion at the current price. The firm seems to have entered a Bitcoin buying spree, having invested another $2 billion just a week before the latest acquisition.
At the moment, MicroStrategy holds the position of the world’s largest corporate Bitcoin holder, and the firm seems intent on maintaining that position. Michael Saylor promised to offer more details regarding the MicroStrategy Convertible Notes offering during a webinar on Tuesday, November 19, where he pledged to answer all questions besides offering the private offering and strategic plans moving forward.
Conclusion
As the world’s largest corporate Bitcoin holder, data from Portfolio Labs shows that MicroStrategy’s aggressive Bitcoin buying spree is already paying off as the company’s MSTR surged 485%. Between the large Bitcoin holdings and the growing stocks, the firm already holds the title it calls “the world’s first and largest Bitcoin treasury company.”
Should the company’s stock continue soaring, buyers of the MicroStrategy Convertible Notes offering will benefit from the appreciation. Those who choose not to convert and wait until the notes mature will have made a low-risk investment. The greatest risk in this entire gamble lies in the direction that the Bitcoin rally will take based on market volatility.
