MicroStrategy Reveals Pricing for Convertible Notes Offering

MicroStrategy has unveiled the pricing for its recent convertible notes offering amounting to $700 million. Following the initial announcement of a $500 million offering, the company increased the principal amount to $700 million in the latest release. The offering is expected to conclude on June 17, 2024.

The notes will be classified as unsecured, senior obligations of MicroStrategy, carrying an interest rate of 2.25% per annum. Interest will be paid semi-annually on June 15 and December 15 each year, starting from December 15, 2024. Unless certain conditions trigger early actions like repurchase, redemption, or conversion, the maturity date for the notes is June 15, 2032.

As per the statement issued by MicroStrategy on June 14, the conversion rate for the notes stands at 0.4894 shares of MicroStrategy's class A common stock per $1,000 principal amount of notes. This equates to approximately $2,043.32 per share, representing a 35% premium over the U.S. composite volume-weighted average price of the company's stock on June 13, 2024, which was $1,513.46.

The $700 million offering presents qualified institutional buyers with an opportunity to opt for an additional $100 million. In the previous announcement on June 13, an additional $75 million of the aggregate principal amount was highlighted.

MicroStrategy has also announced the redemption of $650 million worth of convertible notes due in 2025. Conversion requests will be settled in shares, and the redemption is scheduled for July 15, 2024.

MicroStrategy anticipates a total raise of $687.8 million or potentially up to $786.0 million if initial buyers exercise the option to acquire additional notes fully. The company intends to use the proceeds from the notes offering to purchase more Bitcoin (BTC), adding to its existing holdings of 214,400 BTC, the largest among corporate entities excluding BlackRock's extensive BTC support.