Bitcoin Reserve Strategy Pioneer MicroStrategy (originally MicroStrategy) claims that even if Bitcoin’s price drops to 8K, the company still has enough assets to fully repay MicroStrategy’s debt. Founder Michael Saylor states that the company plans to convert the convertible bonds into equity within the next 3 to 6 years.
Even if Bitcoin drops to 8K, MicroStrategy can still repay all its debt
According to information on MicroStrategy’s official website, Strategy’s current net debt is approximately $6 billion, based on its Cum Notional, which reflects the “priority of debt repayment” and “net debt after cash buffers.” Its logic includes three levels:
The nominal value of the debt itself
Tools arranged by shorter remaining maturity (i.e., earlier due date) or higher debt seniority
Finally, subtract its USD Reserve, currently $2.25 billion
Using this logic, Strategy’s current net debt is $5.964 billion, and its holdings of 714,644 Bitcoin can withstand Bitcoin dropping to $8,345, allowing it to repay its current convertible debt.
Convertible bonds to be converted into equity within 3 to 6 years
Looking at MicroStrategy’s current convertible bonds, they mature between 2028 and 2032, with conversion prices ranging from $183 to $672. Compared to MSTR’s current stock price of $133, there is still a gap. However, if the stock price does not reach the conversion price at that time, the company will repay the principal at nominal value. From the company’s perspective, it seems more inclined to convert debt into equity to reduce cash flow pressure.
This is also the goal of founder Michael Saylor: to convert convertible bonds into equity within the next 3 to 6 years.
This article: Bitcoin drops to 8K, MicroStrategy can still repay all debts! Why does Saylor have the confidence to say this? Originally published on Chain News ABMedia.
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