MicroStrategy is offering $550m in convertible notes with net proceeds to buy bitcoin

Business intelligence software company MicroStrategy has announced it is offering $550 million worth of convertible senior notes and intends to use the net proceeds to buy bitcoin.

The company said in a press release on Wednesday that the notes are being offered in a private placement to qualified institutions and are expected to close on December 12.

MicroStrategy estimates the net proceeds from the offer will be around $537.2 million after subtracting necessary expenses and discounts. 

As to the purpose of the offer, the firm said it "intends to invest the net proceeds from the sale of the notes in bitcoin in accordance with its Treasury Reserve Policy pending the identification of working capital needs and other general corporate purposes."

It remains to be seen how much of the intended issuance will be completed or whether this method of purchasing bitcoin via debt issuance would lead to any pushback from the U.S. Securities and Exchange Commission. 


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MicroStrategy said the $550 million offering will be its unsecured and senior debts that bear an annualized interest rate of 0.75% that is payable semi-annually on June 15 and December 15 of each year.

The first payout will begin on June 15 2021 and the notes will mature on December 15, 2025, "unless earlier repurchased, redeemed or converted in accordance with their terms," the firm said.

MicroStrategy added in the announcement that the conversion rate for the notes will initially be 2.5126 shares of its class A common stock per $1,000 principle amount of notes.

That would translate to an initial conversion price of about $397.99 per share, which stands at a roughly 37% premium over MicroStrategy stock's closing price at $289 as of December 8.

The announcement comes just two days after MicroStrategy said it was planning to raise $400 million by offering senior convertible notes with the intention to buy bitcoin with net proceeds.

About Author

Wolfie joined The Block’s news team in 2020 and switched to the research side in 2021 to focus on crypto mining analysis. Prior to The Block, he had been a journalist at CoinDesk for three years. Wolfie has a background in financial journalism.