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MicroStrategy Is Selling $600 Million In Bonds To "Acquire Additional Bitcoins"

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by Tyler Durden
Tuesday, Feb 16, 2021 - 8:57

With Bitcoin surpassing $50,000 for the first time this morning, Business intelligence and mobile software firm MicroStrategy has announced it intends to sell bonds and use the net proceeds to "acquire additional bitcoins."

In the last few weeks, MicroStrategy has been adding more bitcoin to its reserves (here and here most recently), and today unveiled plans to offer $600 million of convertible senior notes due 2027 in a private offering to institutional buyers.

The notes will be unsecured, senior obligations of MicroStrategy and will bear interest payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2021.

The notes will mature on February 15, 2027, unless earlier repurchased, redeemed or converted in accordance with their terms. Subject to certain conditions, on or after February 20, 2024, MicroStrategy may redeem for cash all or a portion of the notes. The notes will be convertible into cash, shares of MicroStrategy’s class A common stock, or a combination of cash and shares of MicroStrategy’s class A common stock, at MicroStrategy’s election. Prior to August 15, 2026, the notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the second scheduled trading day immediately preceding the maturity date. The interest rate, conversion rate, conversion price and certain other terms of the notes will be determined at the time of pricing of the offering.

MicroStrategy intends to use the net proceeds from the sale of the notes to acquire additional bitcoins.

As a reminder, MicroStrategy first disclosed it was purchasing bitcoin as a part of its treasury reserve policy in August 2020 when at the time the company purchased 21,454 bitcoin at a price of $250 million.

CEO Michael Saylor has been vocally touting bitcoin as a more superior reserve asset and store of value than the US dollar and gold.

“We find the global acceptance, brand recognition, ecosystem vitality, network dominance, architectural resilience, technical utility, and community ethos of Bitcoin to be persuasive evidence of its superiority as an asset class for those seeking a long-term store of value,” Saylor said after the intial disclosure, adding:

“Bitcoin is digital gold – harder, stronger, faster, and smarter than any money that has preceded it. We expect its value to accrete with advances in technology, expanding adoption, and the network effect that has fueled the rise of so many category killers in the modern era.”

As Coin Desk notes, in the company’s earnings call last week, Saylor had mentioned that MicroStrategy is set to “continue to actively manage” its balance sheet and “progressively acquire more bitcoin” at prices “that probably keep going up.”

“Regarding our bitcoin strategy, our pioneering decision to make bitcoin our primary treasury reserve asset has made MicroStrategy a thought leader in the cryptocurrency market and generated great interest in MicroStrategy as a corporation,” the CEO said.

Since starting its allocation into bitcoin, MicroStrategy’s stock price has increased over 750%...

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