MicroStrategy to Issue $500M Convertible Notes, Eyes Bitcoin Purchase

• MicroStrategy’s $500M notes offering will fund significant Bitcoin purchases and corporate purposes.
• The flexible conversion options for MicroStrategy’s notes add appeal for investors seeking diverse returns.
• Market conditions will influence the additional $75M in notes offered, impacting MicroStrategy’s funding strategy.

MicroStrategy Incorporated, a prominent business intelligence firm and major Bitcoin holder, announced a $500 million private offering of convertible senior notes due in 2032, with proceeds primarily intended for further Bitcoin acquisition.

The offering, targeted at qualified institutional buyers, will be conducted under Rule 144A of the Securities Act of 1933. MicroStrategy may also allow initial purchasers to buy up to an additional $75 million in notes within 13 days of issuance, depending on market conditions.

The notes, which are unsecured and senior obligations, will bear semi-annual interest payable on June 15 and December 15 each year, starting from December 15, 2024. They mature on June 15, 2032, but may be repurchased, redeemed, or converted earlier.

Beginning June 20, 2029, MicroStrategy can repay the notes in cash if at least $75 million in notes remain outstanding. Conversely, noteholders can request repurchase on June 15, 2029.

Note conversion is flexible, allowing for cash, MicroStrategy’s class A common stock, or a combination, at the company’s discretion. Before December 15, 2031, conversion is subject to specific conditions.

Afterward, conversion is allowed anytime until two trading days before maturity. The terms, including the interest rate and initial conversion rate, will be determined during the offering’s pricing, expected to be based on the U.S. composite volume-weighted average price of MicroStrategy’s class A common stock on the pricing date.

MicroStrategy plans to use the net proceeds of this offering mainly for purchasing more bitcoins and other corporate purposes. This is in line with the company’s long term strategy to increase its reserve of bitcoins for future use.

The notes and class A common stock to be issued upon conversion of the notes have not been registered under the Securities Act or the securities laws. Hence, these notes cannot be offered or sold in the U.S. without registration or a suitable exemption.

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