MicroStrategy Boosts Convertible Debt Offering By $175 Million, Announces Pricing

MicroStrategy, the world’s largest corporate Bitcoin holder, announced on Wednesday it had raised the principal offering on its convertible senior note sale by $175 million, increasing the total offering to $875 million.

MicroStrategy initially announced a $700 million convertible debt offering on Monday, maturing in 2028, with proceeds set to refinance existing debt and fund further Bitcoin acquisitions.

By Wednesday morning, the company confirmed that the offering had increased to $875 million in total.

MicroStrategy Debt Offering Increases Amid Strong Demand

The offering comes with a 0.625% interest rate, substantially lower than MicroStrategy’s past debt issuances and well below the Federal Reserve’s current benchmark rate of 5.25%.

“MicroStrategy also granted to the initial purchasers of the notes an option to purchase, within a 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $135 million aggregate principal amount of the notes,” the company added.

MicroStrategy’s convertible notes offer investors two options: they can either hold the bond to maturity and earn the small yield provided, or convert the bond into MicroStrategy (MSTR) stock at a pre-determined rate.

The conversion rate is set at 5.4589 shares of Class A stock per $1000, or $183.19 per share, representing a 40% premium over the current market price.

Investors can convert the notes into shares anytime between March 15, 2028, and September 13, 2028, just two days before the bonds mature.

MicroStrategy’s Debt Strategy and Bitcoin Performance

Since beginning its Bitcoin accumulation in 2020, MicroStrategy’s stock has surged from $140 to a peak of $1,900 in March 2024.

In response to its rising stock price, the company enacted a 10:1 stock split to keep shares accessible and liquid for smaller investors.

MicroStrategy’s aggressive debt strategy has allowed the firm to amass 244,800 BTC, solidifying its position as the largest corporate Bitcoin holder globally.

Their total investment has appreciated by 53.8% compared to their average acquisition cost, according to data from Saylortracker.

Year to date, MicroStrategy shareholders have benefited from a 17% increase in “BTC-per-share” as the company continues to sell shares at a premium to buy additional Bitcoin.

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