MicroStrategy yesterday announced its third debt offering of 2024. The company is seeking to raise US$700 million (AU$1.03b) to pay off existing debt and invest in more Bitcoin. MicroStrategy to Launch $700M Debt Offering, Aims to Expand Bitcoin Holdings
MicroStrategy is currently the world’s largest corporate holder of Bitcoin, with a stash of 244,800BTC currently valued at approximately US$14 billion (AU$20.7b).
MicroStrategy, the world’s largest corporate hodler of Bitcoin, yesterday announced its third debt offering of 2024. The tech company owned by Bitcoin true-believer, Michael Saylor, aims to raise US$700 million (AU$1.03b) in this debt offering in the form of convertible senior notes, which mature in 2028. The proceeds will be used to pay off existing debt and purchase more Bitcoin.
This latest debt offering is a continuation of MicroStrategy’s corporate strategy of using debt offerings to fund further Bitcoin investment. Only qualified institutional investors will be eligible to participate in the debt offering.
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Proceeds To Pay Off Earlier Debt Offerings and Buy Bitcoin
According to MicroStrategy’s announcement, US$500 million (AU$741.6m) of the capital raised in this offering will be used to pay off a previous offering of senior secured notes, with the remainder going towards buying more Bitcoin and “general corporate purposes”. MicroStrategy to Launch $700M Debt Offering, Aims to Expand Bitcoin Holdings
It said the latest debt offering would be “unsecured, senior obligations of MicroStrategy” and the notes will pay interest semi-annually starting on March 15 of 2025.
This offering comes after two earlier debt offerings so far in 2024: in March the company raised about US$700 million, followed by a similar offering in June for US$500 million.
Although it seems strange to use debt offerings to pay off previous debt offerings, refinancing debt in this way is actually fairly common among corporations as it often allows them to negotiate better terms.
MicroStrategy Holds an Awful Lot of Bitcoin
MicroStrategy is the world’s largest corporate holder of Bitcoin, with 244,800BTC valued at approximately US$14 billion (AU$20.7b) as of September 13, 2024.
In fact, the company holds so much Bitcoin that its stock often behaves as something of a proxy for the price of Bitcoin, rising and falling pretty much in line with the OG crypto.
Year-to-date, MicroStrategy’s share price is up just under 100% off the back of BTC’s relatively strong performance earlier in the year driven by the launch of US spot ETFs. Recently though, the company’s share price has been flat as the crypto market has cooled — since July 1 MicroStrategy’s share price has dropped slightly from US$136.60 to US$134.53 at the time of writing.
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