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MicroStrategy reveals pricing for convertible note offering expected to close on Monday

MicroStrategy reveals pricing for convertible note offering expected to close on Monday

The BlockThe Block2024/06/14 12:49
By:Adam James

MicroStrategy provided the pricing of its offering of $700 million of 2.25% convertible senior notes.The offering is expected to close on June 17.

MicroStrategy has set out the pricing of its offering of $700 million of 2.25% convertible senior notes, which is expected to close on June 17.

The unsecured notes — which will mature in 2032 unless repurchased, redeemed or converted — will be sold in a private offering to qualified institutional buyers, per regulations.

The notes' conversion rate will initially be 0.4894 shares of MicroStrategy class A common stock per $1,000 principal amount of notes — equivalent to roughly $2,043.32 per share, which represents a premium of approximately 35% over the U.S. composite volume weighted average price of said stock — according to a press release .

MicroStrategy anticipates that the sale's net proceeds will be roughly $687.8 million. It intends to use the proceeds to acquire additional bitcoin alongside general corporate purposes. The firm already holds 214,400 bitcoins.

On June 13, the company said it was seeking to raise $500 million via a convertible senior note offering, with an option for an additional $75 million.

Bernstein starts monitoring MicroStrategy

As The Block reported earlier today, analysts at research and brokerage firm Bernstein initiated coverage on MicroStrategy with an outperform rating — targeting a $2,890 price for the stock by the end of next year, which is an 80% increase from current prices.

“Our risk analysis on debt suggests low risk for 2025 convertible and moderate risk for 2027/2030 convertible, based on today’s bitcoin price — already in-the-money. 2027/2030 convertible debt would require BTC -1.100% price above $125K, at 10% premium to MSTR stock,” Bernstein analysts said. “We believe MSTR’s long term convertible debt strategy allows it enough time to gain from bitcoin upside, with limited liquidation risk to its bitcoin on balance sheet.”


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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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