Michael Saylor's MicroStrategy Plans Another $700M Convertible Note Issuance

• MicroStrategy proposed to issue $700 million of convertible senior notes, with $500 million to be used to redeem a previous tranche of notes.
• The remainder of the money could be used to buy additional bitcoin.

Nasdaq-listed bitcoin development firm MicroStrategy (MSTR) announced Monday that it intends to offer $700 million aggregate principal amount of convertible senior notes due 2028.

The company plans to use the proceeds of the offering to redeem $500 million worth of senior secured notes with 6.125% annual yield maturing in 2028, the press release said. It will use the rest of the proceeds to purchase more bitcoin (BTC) and for general corporate uses.

The firm also plans to grant to the initial purchasers of the notes an option to buy up to an additional $105 million aggregate principal amount of notes within a 13-day period starting on the issuance date of the first notes. The company said it may redeem for cash all or a portion of the notes on or after December 20, 2027, subject to certain conditions.

The company, led by Executive Chairman Michael Saylor, started purchasing bitcoin in 2020, adopting it as a reserve asset for its treasury. Since then, it has become the largest corporate buyer of bitcoin, accumulating 244,800 BTC, worth roughly $14.2 billion at current prices. Only days ago, MicroStrategy disclosed the purchase of an additional $1.1 billion worth of bitcoin, leaving it with $900 million available under a previous offering.

Recently, other public companies such as Semler Scientific and Japanese investment adviser Metaplanet have followed MicroStrategy's footprints to issue debt to accumulate bitcoin.

MSTR shares slid 4.9% during regular trading today alongside a sizable decline in the price of bitcoin. Shares are down another 1.6% in after hours trading. They remain higher by about 300% on a year-over-year basis.