Digital Assets: MicroStrategy Borrowing $400M To Bump Up Bitcoin Bet

December 8, 2020 | Digital Assets, Latest News, News
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This would be MicroStrategy’s fourth multi-million-dollar investment in bitcoin.

MicroStrategy (NASDAQ: MSTR), the listed business intelligence company that pioneered corporate treasury investing in bitcoin, announced an issue of $400 million aggregate principal amount of convertible senior notes due 2025 in a private offering to qualified institutional buyers. The company will invest the net proceeds of the issue in bitcoin, it said on Monday. (Cryptonews)

Convertible senior notes

The terms of the issue are as follows:

  • Unsecured
  • Interest payable semi-annually in arrears
  • Maturity on December 15, 2025
  • After December 20, 2023, MicroStrategy may elect to redeem for cash all or a part of the notes
  • At the option of MicroStrategy, it may convert the notes into cash, common stock, or a combination thereof
  • Prior to June 15, 2025, the notes will be convertible only upon the occurrence of certain events and during certain periods
  • Thereafter, at any time until the second scheduled trading day immediately preceding the maturity date
  • The interest rate, conversion price, and other terms would be determined at the time of the pricing of the notes

MicroStrategy has the option to issue an additional $ 60 million worth of convertible notes to initial purchases within 13 days of the commencement of the offering.

MicroStrategy investments in bitcoin

In August, MicroStrategy made waves when it announced it had invested $ 250 million of its corporate reserves in 21,000 bitcoin.

The following month, it added to that with a further investment of 16,800 bitcoin for $ 175 million.

Last week the company bought another $ 50 million of bitcoin, taking its stock of the cryptocurrency to approximately 41,000.

The investment has paid off in spades because of the sharp rally in bitcoin in recent months.

The share price of the company has reflected the massive appreciation in the value of its bitcoins, currently estimated to be worth about $ 800 million.

MSTR has gained 85% over the last month, 142% over the quarter, and is up 136% year to date. It traded at $ 100 during March and April this year and is now trading more than 3X higher at $336.22.

So far, the company, which is led by bitcoin enthusiast Michael Saylor, has been scaling up its bets.

With the latest plan to invest a further $ 400 million through the issue of a convertible note, the company is roughly doubling its bitcoin exposure.

Related Story:  “An Ocean Of $250T In Assets Will Move To The Bitcoin Pond”                                                 

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