MicroStrategy completes $3B offering of convertible Senior Notes due 2029

MicroStrategy, a leading business intelligence firm, announced the completion of its 0% convertible senior notes offering worth $3B, which is due in 2029. The money raised will be used to purchase more Bitcoin for the world’s largest Bitcoin treasury company. MicroStrategy’s CEO said the convertible senior notes will come at a 55% premium with an implied strike price of $672.

The business intelligence firm clarified that the ‘unsecured’ senior notes will not bear regular interest. Instead, it disclosed that the convertibles sold at a discount will mature to face value. The $3B debt offering followed MicroStrategy’s November 18th announcement to raise $1.75B, which was increased on November 20th to $2.6B. 

According to MicroStrategy’s recent announcements, the offerings are part of the company’s plans to raise $42B in the next three years to accumulate more BTC under its 21/21 strategy. The firm had earlier mentioned its strategic plan to have $21B in fixed-income securities and $21B in equity. Saylor tracker’s data showed that the firm had the most BTC held by any company, with 332.2K Bitcoin worth over $32.7B.

MicroStrategy secures funding to buy more Bitcoin

$MSTR has completed a $3 billion offering of convertible notes at 0% coupon and 55% premium, with an implied strike price of ~$672. https://t.co/GzO0br0Xfh

— Michael Saylor⚡️ (@saylor) November 21, 2024

The firm’s November 21st press release confirmed that the net proceeds from the completed sale of the notes were $2.97 billion. According to MicroStrategy, the reduced amount was arrived at after deducting the initial buyers’ discounts, commissions, and estimated offering expenses payable by the firm. 

The publicly traded company announced that it intended to use all the proceeds to acquire additional Bitcoin and for general corporate purposes. MicroStrategy could acquire nearly 30,270 BTC if all the $3 billion went to buying Bitcoin. MSTR actually needs 36K BTC to get to 2% of the circulating supply.

Interestingly, Google Finance data revealed that MSTR shares dropped over 25% from $536.7 to $397.28 on November 21st. As per the data, MSTR’s change in share price included a 5.3% recovery in after-hours trading. The data confirmed that MSTR was the second most-traded stock in the U.S. on November 20th, and it was up 480% YTD.

The fall came as Citron Research disclosed that it had hedged a short position on MSTR. Citron Research suggested that MSTR shares had become ‘overheated’ and that its volume had ‘completely detached from Bitcoin fundamentals.’ Bloomberg’s senior analyst Eric Balchunas revealed that MicroStrategy contributed nearly $50 billion to the record-setting $70 billion trading volume on November 21st.

Michael Saylor loses voting control amid soaring BTC acquisition 

‘On the Brink’ podcast co-host Matt Walsh pointed out that Saylor no longer had voting control of MicroStrategy. According to MSTR filings, MicroStrategy’s ‘controlled company status’ changed due to the volume of shares sold under the Sales Agreements. The filings read in part that the Executive Chairman would no longer hold more than 50% of the aggregate voting power. 

Saylor previously held 51.7% of the voting rights before the issuance of a significant amount of stock and debt to buy Bitcoin. Nasdaq classified MicroStrategy as a ‘controlled company’ due to Saylor’s sole control over the company’s management and decision-making. 

However, CrossAngle wrote that MicroStrategy had to establish a new board nominating committee led by Carl Rickertsen since it no longer enjoyed exemptions under Nasdaq’s governance rules. MicroStrategy was also required to adopt a new nomination committee charter, as per CrossAngle’s report. The Web3 research and analytics platform noted that further details about MicroStrategy’s restructuring would be disclosed in future U.S. SEC filings, which are expected no later than February 2025.

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