MicroStrategy Plans $700 Million Note Sale to Buy More Bitcoin and Reduce Debt

• MicroStrategy will issue $700M in senior notes to finance additional Bitcoin purchases and debt reduction.
• The firm holds 244,800 BTC, worth $14.2B, and plans to use new funding to acquire more Bitcoin and repurchase $500M in debt.
• MicroStrategy’s stock fell 4.9% after the announcement, reflecting market volatility but remains up 300% year-over-year.

MicroStrategy, led by Michael Saylor, has announced plans to sell up to $700 million in senior convertible notes to fund more Bitcoin purchases and repurchase existing debt. The business intelligence firm, known for its heavy Bitcoin holdings, said the private offering will depend on market conditions. These senior convertible notes will mature in 2028, with interest paid semi-annually.

Expanding Bitcoin Holdings

MicroStrategy has been aggressively increasing its Bitcoin holdings since 2020. The company recently bought 18,300 BTC, valued at over $1 billion. This brings its total Bitcoin holdings to 244,800 BTC, worth an estimated $14.2 billion at current prices. These purchases make MicroStrategy the largest corporate holder of Bitcoin. It is notable that the company has continued these acquisitions, regardless of market conditions.

The firm plans to use the proceeds from the sale of these notes primarily to redeem $500 million in senior secured notes that carry a 6.125% interest rate. This move will free up additional resources for the company. Any remaining funds from the sale will be used to purchase more Bitcoin and for other corporate purposes.

Debt Repurchase Plans

MicroStrategy’s total debt currently stands at $3.9 billion as of June 2024. The new issuance is intended to help restructure this debt. The company plans to grant buyers of the new notes an option to purchase an additional $105 million within 13 days of the initial issuance. MicroStrategy may also redeem these new notes for cash starting in December 2027, depending on certain conditions.

This effort to reduce debt while increasing its Bitcoin holdings shows MicroStrategy’s continued confidence in Bitcoin as a reserve asset. The company has repeatedly stated that Bitcoin is a critical part of its corporate strategy.

Market Impact and Recent Trading Activity

Despite the announcement, MicroStrategy’s stock (MSTR) has faced some volatility. It dropped 4.9% in regular trading and another 1.6% in after-hours trading, reflecting the broader decline in Bitcoin’s value. Nevertheless, MicroStrategy’s shares have risen by around 300% year-over-year, driven largely by its Bitcoin strategy.

While other companies like Semler Scientific and Metaplanet have followed MicroStrategy’s footsteps in issuing debt to acquire Bitcoin, MicroStrategy continues to lead in both its aggressive strategy and its overall Bitcoin holdings.