Breaking: MicroStrategy Completes $1.01B Offering of Convertible Senior Notes Due 2028

MicroStrategy in a latest press release today announced that, on September 19, 2024, it completed its previously announced offering of 0.625% convertible senior notes due 2028.

The total amount of notes sold in the offering was $1.01 billion. This includes $135 million of notes issued through an option granted to the initial purchasers. The option was exercised in full on September 18, 2024, and the additional purchase was completed on September 19, 2024.

The notes, sold to qualified institutional buyers are senior obligations of MicroStrategy and have an interest rate of 0.625% per year, paid twice a year on March 15 and September 15, starting from March 15, 2025. They will mature on September 15, 2028, unless repurchased, redeemed, or converted earlier.

After December 20, 2027, MicroStrategy can redeem the notes for cash at a price equal to 100% of the principal amount plus any unpaid interest. If MicroStrategy redeems some of the notes, at least $75 million of notes must remain outstanding.

The initial conversion rate is 5.4589 shares of MicroStrategy’s class A common stock per $1,000 principal amount, equivalent to a conversion price of $183.19 per share, which represents a 40% premium over the stock’s weighted average price on September 17, 2024.

The net proceeds from the sale of the notes were approximately $997.4 million, after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by MicroStrategy.

MicroStrategy plans to use the $997.4 million net proceeds to redeem its outstanding $500 million 6.125% Senior Secured Notes and to use any balance of the net proceeds to acquire additional bitcoin and for general corporate purposes. Upon redemption, approximately 69,080 bitcoins securing the Senior Secured Notes will be released.

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