MicroStrategy ups debt offering to $700 million to buy more Bitcoin

MicroStrategy’s MSTR shares surged by about 3% in pre-market trading following the company’s announcement to increase its convertible debt offering to $700 million, up from the initially planned $600 million.

This uptick in stock performance maintains the ongoing positive trend observed in MSTR shares since the year began.

According to data from Yahoo Finance, the stock has soared by nearly 80% since January, reaching approximately $1250. This ascent closely tracks Bitcoin’s upward trajectory, coinciding with the introduction of several exchange-traded funds (ETFs) in the US.

Convertible notes offering

On Mar. 5, MicroStrategy initially announced intentions to offer $600 million in convertible senior notes due 2030 to fund further acquisitions of Bitcoin. The firm later increased this offer to $700 million on Mar. 6 at an interest rate of 0.625% per annum.

MicroStrategy stated:

“The offering was upsized from the previously announced offering of $600 million aggregate principal amount of notes. The offering is expected to close on March 8, 2024, subject to satisfaction of customary closing conditions.”

The offering aims to attract qualified institutional buyers under Rule 144A of the Securities Act of 1933.

According to MicroStrategy, the pricing of its convertible debt is structured to ensure an initial conversion rate of $1,497.68 per share, marking a substantial 42.5% premium over the previous day’s closing price of $1,051.01. The firm anticipates generating between $684.3 million and $782.0 million in proceeds, contingent upon the exercise of additional notes by initial purchasers.

These funds are earmarked for further Bitcoin acquisitions and general corporate purposes. As of Mar. 7, MicroStrategy boasts an impressive stash of approximately 193,000 BTC, acquired for over $6 billion. At present, the value of its Bitcoin holdings exceeds $13 billion, according to Saylortracker.

MicroStrategy’s decision to funnel the net proceeds into Bitcoin reflects its unwavering confidence in the cryptocurrency as a strategic asset class.

The company’s chairman, Michael Saylor, has consistently reaffirmed his commitment to holding Bitcoin, signaling no intention to divest now or in the future. This resolute stance emphasizes MicroStrategy’s bullish outlook on the enduring value proposition of Bitcoin in the corporate investment landscape.