TYSONS CORNER, Va. - MicroStrategy Incorporated (NASDAQ:MSTR), known for its investments in bitcoin and business analytics software, has upsized its private offering of convertible senior notes to $525 million, an increase from the initial $500 million proposed. The notes, with a 0.875% interest rate, are due in 2031 and are expected to close on March 18, 2024, subject to customary closing conditions.
The convertible senior notes will be unsecured and will pay interest semi-annually, starting September 15, 2024. They will mature on March 15, 2031, unless repurchased, redeemed, or converted earlier. MicroStrategy may redeem the notes in full or in part for cash after March 22, 2028, under certain conditions, including the company's stock price exceeding a set threshold.
Noteholders have the option to require MicroStrategy to repurchase the notes at 100% of the principal amount plus accrued interest on September 15, 2028, or upon certain fundamental changes. Additionally, the notes are convertible into cash, shares of MicroStrategy's class A common stock, or a combination thereof, at the company’s discretion, under certain conditions before September 15, 2030, and at any time before the maturity date thereafter.
The initial conversion rate is set at 0.4297 shares per $1,000 principal amount of notes, corresponding to an initial conversion price of about $2,327.21 per share. This price is a 40% premium over the volume weighted average price of MicroStrategy's stock on March 14, 2024.
MicroStrategy estimates net proceeds from the note offering to be approximately $515 million, or $592.3 million if the option to purchase additional notes is fully exercised. The company plans to use the proceeds to acquire more bitcoin and for general corporate purposes.
The notes are offered to qualified institutional buyers per Rule 144A under the Securities Act, without registration under the Securities Act or any state securities laws. The offer and sale of the notes and the shares of common stock potentially issuable upon their conversion have not been registered, and they may not be offered or sold in the United States absent registration or an exemption from registration.
This news article is based on a press release statement from MicroStrategy Incorporated.
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