MicroStrategy Announces Full Redemption of 0.750% Convertible Senior Notes due 2025
MicroStrategy (Nasdaq: MSTR) has announced the full redemption of its 0.750% Convertible Senior Notes due 2025, aggregating to $650 million. The redemption is scheduled for July 15, 2024, at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest. Holders have the option to convert their notes into MicroStrategy's class A common stock at a conversion rate of 2.5126 shares per $1,000 principal amount, reflecting a conversion price of $397.99 per share, until July 11, 2024. MicroStrategy has chosen to fulfill its conversion obligation solely with class A common stock and cash for fractional shares. This notice does not constitute an offer to buy or sell the Notes.
- Full redemption of $650 million Convertible Senior Notes demonstrates financial capability.
- Redemption price set at 100% of principal, ensuring full return of investments plus accrued interest.
- Conversion option provides flexibility to Note holders, potentially increasing stock liquidity.
- Firm decision to fulfill conversion obligation with class A common stock, boosting shareholder value.
- Potential dilution of class A common stock due to conversion of Notes.
- Redemption results in $650 million cash outflow, impacting liquidity.
- Current stock price significantly below conversion price ($397.99), possibly deterring conversions.
Insights
MicroStrategy's announcement of a full redemption of its 0.750% Convertible Senior Notes due 2025 is a significant financial event. The redemption of $650 million in notes indicates that MicroStrategy is in a strong enough financial position to retire this debt early. While this move eliminates interest expenses associated with these notes, investors should consider the implications for the company's cash flow and liquidity. The decision to satisfy the conversion obligation with shares rather than cash signals confidence in the company's stock performance. However, this could lead to potential dilution of existing shares if many noteholders opt to convert.
In the short term, eliminating debt can improve the balance sheet and might be seen positively by the market. Yet, the potential dilution could exert downward pressure on the stock price if many investors choose to convert their notes into shares. It is essential to monitor the company's financial health and market reactions closely.
This redemption highlights a strategic financial decision by MicroStrategy, emphasizing their intent to optimize their capital structure. Investors might interpret this move as a sign of operational strength and confidence in future growth, which could positively impact market sentiment in the short term. However, the potential for share dilution remains a concern. If many noteholders convert their notes to shares, it could increase the total number of outstanding shares, potentially diluting the value of existing shares.
Additionally, this action could signal to the market that management believes the stock is currently undervalued or poised for growth, as they are willing to issue shares rather than pay cash. This strategy aligns with MicroStrategy's historical focus on leveraging capital markets to fuel its operations and investments.
As a result of the delivery of the Notice, at any time prior to 5:00 p.m.,
In the event that any holder delivers a conversion notice as provided in the indenture related to the Notes, MicroStrategy has elected to satisfy its conversion obligation with respect to each
To convert Notes, a holder must comply with the procedures set forth in the indenture governing the Notes, including electronic presentation and surrender of its Notes for conversion through the facilities of DTC.
This press release shall not constitute a notice of redemption of the Notes. Information concerning the terms and conditions of the Redemption is described in the notice distributed to holders of the Notes by the trustee under the indenture governing the Notes. This press release shall not constitute an offer to buy or a solicitation of an offer to sell any Notes and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offering, solicitation or sale would be unlawful.
About MicroStrategy Incorporated
MicroStrategy (Nasdaq: MSTR) considers itself the world’s first Bitcoin development company. The MicroStrategy software business develops and provides industry-leading AI-powered enterprise analytics software that promotes our vision of Intelligence EverywhereTM. Our flagship cloud-native platform, MicroStrategy ONE, is trusted by the most admired brands in the Fortune Global 500 to drive business agility, efficiency, and revenue. We also use our software development capabilities to develop Bitcoin applications. We believe the combination of our operating structure, Bitcoin strategy and focus on technology innovation provides a unique opportunity for value creation.
MicroStrategy, MicroStrategy AI, MicroStrategy Auto, MicroStrategy ONE, and Intelligence Everywhere are either trademarks or registered trademarks of MicroStrategy Incorporated in
Forward-Looking Statements
Statements in this press release about future expectations, plans, and prospects, as well as any other statements regarding matters that are not historical facts, may constitute “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements relating to the outcome of the Redemption. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: the uncertainties related to market conditions, the completion of the Redemption and other factors discussed in the “Risk Factors” section of MicroStrategy’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 1, 2024, and the risks described in other filings that MicroStrategy may make with the Securities and Exchange Commission. Any forward-looking statements contained in this press release speak only as of the date hereof, and MicroStrategy specifically disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.
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MicroStrategy Incorporated
Shirish Jajodia
Investor Relations
ir@microstrategy.com
Source: MicroStrategy Incorporated
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