MicroStrategy, Plans to Raise $500 Million in Debt
The senior notes, maturing on March 15, 2031, will offer investors semi-annual interest payments and the option to convert the notes into cash.
MicroStrategy's shares have experienced a remarkable surge this year, climbing 180% following the company's recent debt sale to acquire more Bitcoin. The company's founder announced on social media that MicroStrategy had purchased an additional 12,000 bitcoins for approximately $822 million, funded by convertible notes and excess cash. This brings MicroStrategy's total Bitcoin holdings to 205,000, valued at over $15 billion as Bitcoin continues to reach new highs.
The purpose behind this latest debt offering is to fuel MicroStrategy's continued acquisition of Bitcoin, particularly as the cryptocurrency market experiences a surge in prices, with Bitcoin surpassing the $72,000 mark. The senior notes, maturing on March 15, 2031, will offer investors semi-annual interest payments and the option to convert the notes into cash.
MicroStrategy's executive chairman, Michael Saylor, expressed bullish sentiments regarding Bitcoin's future, suggesting that it will outperform gold and attract more institutional investors, especially as it becomes accessible through exchange-traded funds. Saylor also cited optimism about the upcoming halving process, which occurs every four years and reduces the supply of coins, potentially leading to increased demand and price appreciation.
The recent offering of convertible notes due in 2030, which generated approximately $782 million in net proceeds, provided MicroStrategy with additional capital to acquire more Bitcoin. Analysts noted that this offering, with a coupon rate below 1% and a high conversion premium, marks a significant move in leveraging MicroStrategy's capital structure.
MicroStrategy's aggressive accumulation of Bitcoin, with close to 16,000 bitcoins purchased since the beginning of the year, has contributed to its soaring stock value. The company's market capitalization has surged from $1.1 billion to $30 billion since announcing its Bitcoin investment strategy in mid-2020.
Despite its core business in enterprise software and cloud-based services, MicroStrategy's shareholder value is heavily influenced by its Bitcoin holdings. Saylor emphasized the benefits of borrowing at low-interest rates to invest in Bitcoin, which has proven to be highly accretive for shareholders, providing them with more Bitcoin per share and driving substantial value appreciation.
