Michael Saylor's MicroStrategy Prices Upsized $525M Debt Offering to Buy More Bitcoin

BY Coindesk | CORPORATE | 03/15/24 09:01 AM EDT By Jamie Crawley

Self-described Bitcoin development company MicroStrategy (MSTR) is set to add to its 205,000 bitcoin {{BTC}} stack after pricing a $525 million convertible debt offering.

The private placement was upsized from an originally planned $500 million and the purchasers were granted an option to buy up to an additional $78.5 million of the paper, meaning proceeds are likely to be in the $600 million area.

The convertible senior notes will have an interest rate of 0.875% per annum compared to 0.625% in a sale of $800 million of similar debt that took place just days ago. The conversion rate of the new notes will be equivalent to $2,327.31 per share, representing a premium of approximately 40% on MSTR's Thursday average price of $1662.20.

Read more: MicroStrategy Acquires 12,000 More BTC With Convertible Senior Notes Proceeds

MSTR shares dropped 5% on Thursday as bitcoin declined below $70,000. Shares are lower by 3.3% in premarket action alongside a continued fall in bitcoin, now trading at $67,700.

Read More: 'Bitcoin Is Going to Eat Gold': MicroStrategy?s Michael Saylor

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.