MicroStrategy Prices $2.6 Billion Convertible Senior Notes Offering

MicroStrategy raises $2.6B via convertible notes, upsized from $1.75B.

Proceeds will primarily fund Bitcoin acquisitions and corporate purposes.

Notes convertible into cash or stock, with a 55% premium over current share price.

MicroStrategy Incorporated (Nasdaq: MSTR) has announced the pricing of a $2.6 billion offering of its 0% convertible senior notes due 2029. Initially announced as a $1.75 billion issuance, the offering was upsized due to strong demand and is expected to close on November 21, 2024. The company intends to use the proceeds primarily to acquire additional Bitcoin for general corporate purposes.

The convertible senior notes will be unsecured, are senior obligations of MicroStrategy, and will not bear any regular interest. These notes will mature on December 1, 2029, unless repurchased, redeemed, or converted earlier under specified conditions.

On or after December 4, 2026, MicroStrategy can redeem the notes for cash, provided certain price conditions related to the company’s stock are met.

The notes will be sold in a private offering to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933 and to certain non-U.S. persons in transactions conducted outside the United States.

The offering also includes a 3-day option for initial purchasers to acquire an additional $400 million worth of notes.

Holders of the notes can convert them into cash, shares of MicroStrategy’s class A common stock, or a combination of both, depending on the company’s election. Conversion will be available only under certain conditions before June 1, 2029, after which it will be open at any time until the second scheduled trading day before maturity.

The initial conversion rate has been set at 1.4872 shares of class A common stock per $1,000 principal amount of notes, translating to a conversion price of approximately $672.40 per share.

This represents a 55% premium over MicroStrategy’s closing price of $433.80 on November 19, 2024. Adjustments to the conversion rate may occur based on specific events.

MicroStrategy estimates that the net proceeds from this offering will total approximately $2.58 billion, or $2.97 billion, if the option to purchase additional notes is fully exercised.

These funds will primarily be used to acquire additional Bitcoin, with any remaining funds directed toward general corporate purposes.