FX.co ★ MicroStrategy Prices Private Offering Of Convertible Senior Notes

MicroStrategy Inc., a prominent software firm, announced recently the pricing of a private offering of Convertible Senior Notes amounting to $700 million, due by March 15, 2030. The company's shares saw an increase of approximately 6% in pre-market trading activity.

MicroStrategy provided initial purchasers with the option to buy additional notes up to a principal amount of $100 million within a 13-day period starting from the date of the first issue of the notes. The offering was increased to $700 million up from an earlier planned offering of $600 million.

These notes, unsecured senior obligations of the company, have an interest rate of 0.625% per annum, payable twice per year in arrears on every March 15 and September 15, with the first payment starting from September 15, 2024.

The notes issued will be convertible into cash, MicroStrategy's Class A shares, or a mixture of both, as per the company's discretion. Before September 15, 2029, the notes will be convertible only under certain conditions and during particular periods. After this period, they can be converted any time up until two trading days prior to the maturity date.

The initial conversion rate for these notes will be 0.6677 shares of Class A stock for every $1,000 principal amount of notes. This rate represents a premium of around 42.5% over the last reported price of $1,051.01 per Class A share.

MicroStrategy estimates that net proceeds from this offering will be in the vicinity of $684.3 million. The company plans to utilize these proceeds for procuring additional bitcoin as well as general corporate expenditures.

The offering is slated to close on March 8. MicroStrategy's shares were traded at $1111 during pre-market activity, indicating a 5.71% rise on Nasdaq.