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Cryptocurrency market, especially Bitcoin, continues to see significant developments. Accordingly, institutional Bitcoin investor MicroStrategy is trying to sell $700 million in convertible bonds as part of its $600 million strategy announced a few days ago amidst the ongoing crypto bull market.
A Significant Step from MicroStrategy
Details announced on March 6th reveal that the 2030 MicroStrategy convertible bonds will carry an annual interest rate of 0.625%, with a conversion price of $1,497.68 per share, representing a 21% premium over the current trading price of $1,234.48. The company promptly made a statement regarding the matter:
“Bondholders may request MicroStrategy to repurchase their securities at 100% of the principal amount plus accrued and unpaid interest on September 15, 2028, or upon certain events that constitute a fundamental change under the terms of the securities.”
The bonds are available only to accredited or institutional investors. MicroStrategy may redeem the bonds for cash after March 22, 2027, if the common stock continuously trades above 130% of the conversion price.
Noteworthy Details About MicroStrategy
MicroStrategy expects to net $684.3 million from the sale, or $782.0 million if buyers exercise their options, and plans to use the proceeds to purchase additional Bitcoin or for corporate expenses. The company currently holds about 193,000 Bitcoins, purchased at an average price of $31,544, representing a balance of $12.9 billion and a return of 112% since its inception. Concurrently, the company’s stock has yielded a return of 429.2% as part of the broader Bitcoin bull market.
MicroStrategy’s chairman and co-founder Michael Saylor, an enthusiastic Bitcoin proponent, first incorporated the crypto asset into the firm’s corporate asset allocation strategy in August 2020. Since then, MicroStrategy has consistently added Bitcoin to its corporate treasury each quarter. During a panel discussion at the Bitcoin Atlantis conference on March 1st, Saylor argued that artificial intelligence and exchange-traded funds would trigger a decade-long gold rush for Bitcoin.
