Today, MicroStrategy Incorporated disclosed the notes’ pricing, which totals $700 million and are a 0.625% convertible senior note due in 2030.
The notes will be sold in a private offering to people who are regarded qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). This offering, which was expanded from the previously stated $600 million.
Starting on the day of issuance, MicroStrategy extended an additional opportunity to purchase up to an additional $100 million in principal to the original purchasers of the notes over a period of 13 days. With the usual closing conditions in place, the offering is anticipated to close on March 8, 2024.
A conversion price of approximately $1,497.68 per share will be the initial conversion rate, which is set at 0.6677 shares every $1,000 principal amount of notes. The current recorded sale price of MicroStrategy class A common shares, which was last on March 5, 2024, is 42.5% higher than this amount.
After March 22, 2027, if MicroStrategy’s stock price is at least 130% of the conversion price for a predetermined amount of time prior to the redemption notice, MicroStrategy may redeem notes for cash at 100% of principal plus accrued interest.
Aside from that, holders have the option to demand a 100% principle repayment plus accrued interest on September 15, 2028, or in the event of specific fundamental change events. There may be situations where MicroStrategy has to increase the conversion rates of note holders.
The senior, unsecured notes will have an annual interest rate of 0.625% and be considered a liability of MicroStrategy. From September 15, 2024, onwards, they will be due semi-annually in arrears on March 15 and September 15 of each year. March 15, 2030 is when they mature if they aren’t purchased, redeemed, or converted by their terms before then.
The notes may be converted into cash, MicroStrategy class A common stock, or a combination of the two at MicroStrategy’s discretion.
Upon deducting offering expenses, discounts, and fees, MicroStrategy estimates net revenues from the note sale to be about $684.3 million (or $782.0 million if the first buyers exercise their option in full). The company wants to buy more bitcoin with the proceeds and use them for regular business purposes.
Notes and shares issuable upon conversion are being sold to qualified institutional buyers in accordance with Rule 144A; the offer and sale has not been registered under the Securities Act or the securities laws of any other jurisdiction.
It is therefore illegal to offer or sell them in the United States unless they are registered or meet the requirements of an applicable exemption.
