MicroStrategy wants to raise $400 million via debt and buy more bitcoin with it

Nasdaq-listed MicroStrategy said Monday that it plans to raise $400 million via senior secured notes — a type of debt offering — and use the net proceeds of that offering to buy more bitcoin.

MicroStrategy today also announced two new entities — MicroStrategy Services Corporation and MacroStrategy LLC.

MicroStrategy Services Corporation will guarantee the new notes if issued and secure them with the bitcoin that it would acquire.

"The notes will be fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by MicroStrategy Services Corporation, a wholly-owned subsidiary of MicroStrategy, and certain subsidiaries of MicroStrategy that may be formed or acquired after the closing of the offering," said MicroStrategy.

As for backing, the notes will be secured with MicroStrategy’s existing assets, including any bitcoin to be acquired from the proceeds of the notes, but excluding MicroStrategy’s existing bitcoin, said the company. 

MicroStrategy’s existing 92,079 bitcoin (worth about $3.4 billion), on the other hand, will be held by a new entity called MacroStrategy LLC.

In separate news, MicroStrategy today also announced that it expects to incur an impairment loss of at least $284.5 million related to its bitcoin holdings for the three months ending June 30, 2021. Bitcoin's price has declined by around 45% in recent weeks, from around $64,000 in mid-April to nearly $36,500 currently.

About Author

Yogita Khatri is a senior reporter at The Block and the author of The Funding newsletter. As our longest-serving editorial member, Yogita has been instrumental in breaking numerous stories, exclusives and scoops. With over 3,000 articles to her name, Yogita is The Block's most-published and most-read author of all time. Before joining The Block, Yogita wrote for CoinDesk and The Economic Times. You can reach her at [email protected] or follow her latest updates on X at @Yogita_Khatri5.

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