- MicroStrategy Company will offer $400 million in senior conversion notes as part of its Bitcoin investment strategy (BTC).
- Convertible note investors will receive two annual interest payments beginning in June 2021.
MicroStrategy has been one of the companies that have made a recent entry into the crypto market. In August, the company was one of the first to join the wave of adoption that would follow Square and PayPal by announcing an investment in Bitcoin. The company has an estimated 40,824 BTC as part of its treasury reserve and is preparing to increase its exposure to the cryptocurrency.
In a press release, MicroStrategy has announced that it will seek to issue $400 million worth of senior convertible notes due in 2025. The notes will be offered in a private offering to qualified institutional investors under Rule 144A of the U.S. Securities and Exchange Commission (SEC). The funds will be converted into Bitcoin as part of MicroStrategy’s treasury strategy.
MicroStrategy links its future to Bitcoin (BTC)
In addition, MicroStrategy will offer an extra option to purchase $60 million worth of notes in the first 13 days after the initial offer is launched. The company clarifies that the offer is subject to market conditions. Therefore, no guarantee has been made as to the terms on which the offer will be completed.
However, the company has announced that the notes will have two annual interest payments on June 15 and December 15 of each year, beginning in 2021 and ending in 2025. The latter will be subject to the company’s decision to repurchase, redeem, or convert the notes depending on the terms agreed upon with the investors.
After 2023, the company will have the option to redeem all the notes or a portion in cash. The notes may be convertible into cash or into class A shares of the company. MicroStrategy adds:
MicroStrategy 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.
In early December, the company made a purchase of 2,574 BTCs worth $50 million at a price of $19,427 per unit of Bitcoin. In doing so, the company has created buying pressure that serves to support the current price levels of the cryptocurrency.
An additional investment of $400 million in the current price could be the catalyst BTC needs to overcome the $20,000 resistance. In any case, MicroStrategy’s investment seems destined to have a positive impact on Bitcoin’s price. Financial technology investment specialist Ellie Frost had this to say about MicroStrategy’s strategy:
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This is a massive bet on Bitcoin and aligns the company’s future with it. If BTC continues to pump, the stock price will rise and they’re OK. If not…don’t ask Saylor for an xmas gift, he’s got other sh*t to pay off.