In a recent press release, MicroStrategy announced the successful completion of its previously disclosed offering of 0.625% convertible senior notes due 2028. The offering concluded on September 19, 2024.
The total amount raised in the offering was $1.01 billion, which includes $135 million worth of notes sold through an option granted to the initial purchasers. The option was fully exercised on September 18, 2024, with the additional purchase finalized a day later.
Understanding the Terms
The notes, sold to qualified institutional buyers, carry a 0.625% annual interest rate, payable semi-annually on March 15 and September 15, starting in 2025. The notes will mature on September 15, 2028, unless repurchased, redeemed, or converted prior to that date.
After December 20, 2027, MicroStrategy reserves the right to redeem the notes for cash at 100% of the principal value, plus any unpaid interest. If any notes are redeemed, at least $75 million must remain outstanding.
Conversion Rate and Premium
The initial conversion rate is set at 5.4589 shares of MicroStrategy’s Class A common stock per $1,000 principal amount, equating to a conversion price of $183.19 per share. This conversion price represents a 40% premium over the stock’s weighted average price on September 17, 2024.
How MicroStrategy Plans to Use the Proceeds
After deducting the initial purchasers’ discounts, commissions, and other expenses, MicroStrategy netted approximately $997.4 million from the sale. The company intends to use the proceeds to redeem its outstanding $500 million 6.125% Senior Secured Notes. Any remaining funds will be allocated to acquire additional bitcoin and for general corporate purposes.
Once the Senior Secured Notes are redeemed, around 69,080 bitcoins currently securing those notes will be released.
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