MicroStrategy, led by Michael Saylor, wants to buy a huge amount of Bitcoin again. In a recent announcement, the company unveiled plans to issue $500 million in convertible senior notes. MicroStrategy has indicated that it plans to use the proceeds to purchase more Bitcoin and for other business purposes.
However, this is not the first time MicroStrategy has taken this step to increase its Bitcoin supply by offering senior notes. So let’s take a closer look at this development and see how the company continues to increase its bet on Bitcoin.
What exactly does the plan entail?
MicroStrategy has announced a private offering of $500 million in convertible senior notes. These notes, which mature in 2032, are aimed at institutional investors.
The company plans to use the proceeds primarily to purchase additional Bitcoin, in line with its ongoing strategy to expand its Bitcoin holdings through debt financing. The convertible senior notes are unsecured and have a higher claims priority than other debt, but are not secured by collateral.
The announcement states that interest on these notes will be paid semi-annually, with the first payment due in December 2024. They will mature in June 2032 unless earlier converted, redeemed or repurchased.
The notes’ conversion terms also provide flexibility to investors. They can be converted into cash, shares of MicroStrategy’s Class A common stock, or a mix of both. However, the conversion is limited to December 2031 and only becomes freely convertible shortly before the maturity date.
This structure provides potential benefits tied to the performance of MicroStrategy’s shares, while also providing downside protection through the notes’ senior unsecured status.
Previous investments in Bitcoin
This isn’t the first time MicroStrategy has taken on debt to buy Bitcoin. The company has consistently purchased BTC over the years, despite market fluctuations.
Earlier this year, MicroStrategy issued $603.75 million and $800 million in convertible senior notes. According to the April 29 quarterly report, MicroStrategy owns 214,400 Bitcoins.
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Source: https://newsbit.nl/microstrategy-kondigt-verkoop-van-500-miljoen-aan-obligaties-aan-om-meer-bitcoin-te-kopen/
