- The firm intends to invest the net proceeds from the sale of the notes in BTC.
- According to MicroStrategy, the offering will only be open to qualified institutional investors.
- The notes will mature in 2025 and investors can redeem and convert them into cash.
MicroStrategy Inc., a leading independent publicly-traded business intelligence firm, has announced that it seeks to offer a £229.8 million worth of convertible senior notes to raise funds to invest in BTC. A press release unveiled this news on December 7, noting that this offering will be subject to market conditions and other factors. As such, the company will not offer any assurance as to whether, when, or on what terms it will complete the offering. Reportedly, the firm will only sell the notes to qualified institutional buyers while observing Rule 144A under the Securities Act.
According to the press release, MicroStrategy plans to offer the first buyers of the notes an option to purchase up to an additional £44.9 million aggregate principal amount on the notes. However, they would have to make their purchases within a 13-day period, which begins and includes the date on which the company will first issue the notes. The publication went on to note that the notes will be unsecured and that they will earn interest, which will be payable semi-annually in arrears on June 15 and December 15 of each year. The first batch of interest will be paid on June 15, 2021, according to the news release.
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Per MicroStrategy, the notes will mature in 2025 where the buyers will redeem and convert them as per the firm’s terms. However, the notes’ maturity might come sooner if they are repurchased earlier. The company added that on or after December 20, 2023, it might redeem all or a fraction of the notes for cash. Buyers will allegedly have three redemption options at MicroStrategy’s election. These include cash, shares of MicroStrategy’s Class A common stock, or a combination of both.
Investing net profits in bitcoin (BTC)
The company went on to assert that before June 15, 2025, the notes will only be convertible under specific circumstances and at certain periods. Thereafter, the buyers can convert the notes at any time until the second scheduled trading day, which precedes the maturity date immediately. MicroStrategy further cited that it would determine the interest and conversion rates, the conversion price, and other terms regarding the notes at the time of pricing the offering.
In the press release, MicroStrategy noted that it would invest the net proceeds from the sale of the notes in bitcoin (BTC). This investment will reportedly follow the firm’s Treasury Reserve Policy. MicroStrategy said that it would make this investment as it works on coming up with working capital needs and other general corporate objectives.
The company cautioned that the offer and sale of the notes and the shares of MicroStrategy’s class A common stock, which will be issuable upon conversion of the notes has not and will not be registered under the Securities Act or the securities laws of any other country. As such the company will not offer or sell the notes in the United States without registration or the exemption from such requirements. MicroStrategy concluded that it would make an offer on the notes through a private offering memorandum.
This news comes after the company first made headlines in the crypto sector by investing £187 million to purchase 21,454 BTC in August this year. It then bought another 16,796 BTC for £131.2 million in September through Coinbase’s OTC brokerage platform.