As soon as MicroStrategy upsized its convertible notes offering, MSTR stock price rallied by a staggering 18.5% shooting all the way to $1,250 levels.
Earlier this week, the world’s largest corporate Bitcoin holder MicroStrategy Inc (NASDAQ: MSTR) announced it plans to raise $600 million through the issuance of convertible notes and purchase Bitcoin with the proceeds. However, in an update on Wednesday, March 6, the company stated that it plans to upsize its debt offering to $700 million.
Microstrategy revealed today the pricing details of its latest offering, consisting of $700 million aggregate principal amount of 0.625% convertible senior notes due 2030 (referred to as “notes”). The issuance is part of a private offering targeted towards individuals serving as qualified institutional buyers. This is in accordance with Rule 144A under the Securities Act of 1933.
As per the announcement, MicroStrategy has additionally granted the initial purchasers of the notes an option to acquire an additional $100 million aggregate principal amount of the notes. However, this shall happen within a 13-day timeframe from the date of issuance.
MicroStrategy’s Convertible Note Offerings
The business intelligence firm disclosed the terms of its latest offering, consisting of unsecured, senior obligations referred to as notes. These notes will carry an interest rate of 0.625% per annum, payable semi-annually on March 15 and September 15 of each year, starting from September 15, 2024. The maturity date for these notes is set for March 15, 2030, unless they are repurchased, redeemed, or converted earlier in accordance with their terms.
The notes will be convertible into cash, shares of MicroStrategy’s class A common stock, or a combination of both at the company’s discretion. Initially, the conversion rate will be set at 0.6677 shares of MicroStrategy class A common stock per $1,000 principal amount of notes. This is equivalent to an initial conversion price of about $1,497.68 per share.
It also represents a premium of approximately 42.5% over the last reported sale price of MicroStrategy class A common stock on March 5, 2024. However, the conversion rate will be subject to adjustment based on certain events.
Buying More Bitcoins, MSTR Stock Price Shoots
MicroStrategy plans to utilize the net proceeds generated from the sale of the notes for the acquisition of more Bitcoins as well as for general corporate purposes.
Since initiating the acquisition of the digital asset in 2020 as a strategy to hedge against inflation, the enterprise software maker has seen the value of its 193,000 Bitcoin holdings on its balance sheet soar to approximately $13 billion. Last week, the company added some 3,000 Bitcoin more to its kitty.
Soon after the announcement on Wednesday, MicroStrategy (MSTR) stock price rallied by an additional 18.5% all the way to 1,246.21. So far in the first two months of 2024, the MSTR stock has already gained a staggering 80%. It has been clearly outpacing the Bitcoin performance over the last 18 months.
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