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03/15/2024 |

MicroStrategy’s Latest Move: Issuing Convertible Senior Notes

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MicroStrategy, a leading business intelligence firm, is making waves in the financial market with its recent announcement of a private offering of $500 million in convertible senior notes. Just two days prior, the company had priced a separate $800m offering of convertible senior notes. These moves come amidst MicroStrategy‘s ongoing strategy of investing heavily in Bitcoin.

What Are Convertible Notes?

Convertible notes, which can be exchanged for shares when the stock hits a predetermined level, offer companies an option to raise capital at lower interest rates than regular bonds without the risk of immediately diluting shareholders as stock offerings do.

Microstrategy’s Plan For The Notes

MicroStrategy is marketing the corporate bonds at a yield of 0.375%-0.875% with an option to convert when the stock climbs 40% to 45% above current levels. With a current stock price of $1,662.20/share, the conversion rate of the notes will be equivalent to $2,327.31/share.

Rapid Succession of Offerings

The rapid succession of these offerings underscores MicroStrategy‘s commitment to expanding its capital base swiftly. This move aligns with the company’s recent trend of raising funds to fuel its Bitcoin investment strategy, allowing it to add 12,000 additional Bitcoin and bringing its total position to 220,000 BTC.