American software technology firm MicroStrategy has announced the pricing of a new $700-million debt offering due in 2032, which it will use to purchase more Bitcoin.
According to an official press release, the notes will be sold in a private offering to qualified institutional buyers under Rule 144A of the Securities Act of 1933. The offering has been upsized from the previously announced $500-million aggregate principal amount.
The company will use a portion of the proceeds to continue adding more Bitcoin (BTC) to its corporate treasury. MicroStrategy has acquired 214,400 BTC, with an estimated value of $14 billion to date, according to the latest data submitted in its Q1 2024 financial results.
Private offering terms and conditions
The notes, unsecured senior obligations of MicroStrategy, will bear interest at a rate of 2.25% per annum, payable semi-annually in arrears on June 15 and Dec. 15 each year.
Related: MicroStrategy plans $500M stock sale to buy more Bitcoin
The notes will mature on June 15, 2032, “unless earlier repurchased, redeemed or converted” according to their terms.
“Subject to certain conditions, on or after June 20, 2029, MicroStrategy may redeem for cash all or any portion of the notes at a redemption price equal to 100% of the principal amount of the notes to be redeemed.”
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Use of proceeds
MicroStrategy estimates that net proceeds from the sale would be approximately $687.8 million — after deducting initial purchasers’ discounts, commissions and estimated offering expenses.
If the initial purchasers exercise their option to purchase additional notes in full, the total proceeds could reach approximately $786 million.
“MicroStrategy intends to use the net proceeds from the sale of the notes to acquire additional Bitcoin and for general corporate purposes.”
Banking on Bitcoin
MicroStrategy’s move on June 14 follows the firm’s announcement that it plans to raise $500 million through a similar offering on June 13.
The expansion to $700 million continues to align with the Bitcoin-maxi firm’s not-so-micro strategy to bolster its BTC holdings and position in the crypto market.
Related: MicroStrategy and Michael Saylor settle tax case for $40M
It’s important to note that being sold under Rule 144A of the Securities Act 1933 means the notes will not be officially registered under the United States Securities and Exchange Commission (SEC).
Notes traded under Rule 144A cannot be sold or bought in public markets without meeting SEC legal prerequisites.
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