MicroStrategy Completes $1.05 Billion Offering of Convertible Senior Notes Due 2027 at 0% Coupon and 50% Conversion Premium with Bitcoin Use of Proceeds

Rhea-AI Summary

MicroStrategy (Nasdaq: MSTR) has successfully closed its offering of 0% convertible senior notes due 2027, raising $1.05 billion in principal, including an additional $150 million exercised by initial purchasers. The notes, maturing on February 15, 2027, may be redeemed after February 20, 2024, under specific conditions. MicroStrategy intends to use approximately $1.03 billion in net proceeds to acquire more bitcoin. The initial conversion price is set at approximately $1,432.46 per share, representing a 50% premium over its last reported stock price of $955.00.

Positive

• Raised $1.05 billion through convertible senior notes.
• Intends to use proceeds to acquire additional bitcoin, potentially increasing asset value.

Negative

• Notes do not bear regular interest, which may limit short-term cash flow.
• Potentially high conversion price may deter immediate stock conversion.

MicroStrategy^® Incorporated (Nasdaq: MSTR) (“MicroStrategy”) today announced the closing of its previously announced offering of 0% convertible senior notes due 2027 (the “notes”). The aggregate principal amount of the notes sold in the offering was $1.05 billion, which includes $150 million aggregate principal amount of notes issued pursuant to an option to purchase, within a 13-day period beginning on, and including, the date on which the notes are first issued, which the initial purchasers exercised in full on February 18, 2021 and which additional purchase was also completed today. The notes were sold in a private offering to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”).

The notes are unsecured, senior obligations of MicroStrategy. The notes do not bear regular interest, and the principal amount of the notes does not accrete. The notes will mature on February 15, 2027, unless earlier repurchased, redeemed or converted in accordance with their terms. Subject to certain conditions, on or after February 20, 2024, MicroStrategy may redeem for cash all or a portion of the notes at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date, if the last reported sale price of MicroStrategy’s class A common stock has been at least 130% of the conversion price then in effect for a specified period of time ending on the trading day immediately before the date the notice of redemption is sent.

Holders of notes may require MicroStrategy to repurchase their notes upon the occurrence of certain events that constitute a fundamental change under the indenture governing the notes at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus any accrued and unpaid special interest to, but excluding, the date of repurchase. In connection with certain corporate events or if MicroStrategy calls any note for redemption, it will, under certain circumstances, be required to increase the conversion rate for holders who elect to convert their notes in connection with such corporate event or notice of redemption.

The notes are convertible into cash, shares of MicroStrategy’s class A common stock, or a combination of cash and shares of MicroStrategy’s class A common stock, at MicroStrategy’s election. Prior to August 15, 2026, the notes are convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the second scheduled trading day immediately preceding the maturity date.

The conversion rate for the notes is initially 0.6981 shares of MicroStrategy’s class A common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $1,432.46 per share. This represents a premium of approximately 50% over the last reported sale price of $955.00 per share of MicroStrategy’s class A common stock on The Nasdaq Global Select Market on February 16, 2021. The conversion rate is subject to adjustment upon the occurrence of certain events.

MicroStrategy estimates that the net proceeds from the sale of the notes will be approximately $1.03 billion, after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by MicroStrategy.

MicroStrategy intends to use the net proceeds from the sale of the notes to acquire additional bitcoin.

The notes were sold to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The offer and sale of the notes and the shares of MicroStrategy’s class A common stock issuable upon conversion of the notes, if any, have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction, and the notes and any such shares may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements. The offering of the notes was made only by means of a private offering memorandum.

This press release shall not constitute an offer to sell, or a solicitation of an offer to buy the notes, nor shall there be any sale of, the notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful under the securities laws of any such state or jurisdiction.

About MicroStrategy Incorporated

MicroStrategy (Nasdaq: MSTR) is the largest independent publicly-traded business intelligence company, with the leading enterprise analytics platform. Our vision is to enable Intelligence Everywhere^™. MicroStrategy provides modern analytics on an open, comprehensive enterprise platform used by many of the world’s most admired brands in the Fortune Global 500. Optimized for cloud and on-premises deployments, the platform features HyperIntelligence^®, a breakthrough technology that overlays actionable enterprise data on popular business applications to help users make smarter, faster decisions.

MicroStrategy, Intelligence Everywhere, and HyperIntelligence are either trademarks or registered trademarks of MicroStrategy Incorporated in the United States and certain other countries. Other product and company names mentioned herein may be the trademarks of their respective owners.

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 estimated net proceeds of the offering and the anticipated use of such net proceeds. 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 and the other factors discussed in the “Risk Factors” section of MicroStrategy’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 12, 2021, 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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FAQ

What is the aggregate amount raised by MicroStrategy's recent notes offering (MSTR)?

MicroStrategy raised $1.05 billion through its offering of convertible senior notes.

When do MicroStrategy's convertible senior notes mature?

The convertible senior notes will mature on February 15, 2027.

What is the intended use of proceeds from MicroStrategy's notes offering?

MicroStrategy plans to use the proceeds to acquire additional bitcoin.

What is the initial conversion price of MicroStrategy's senior notes?

The initial conversion price is approximately $1,432.46 per share.

What are the risks associated with MicroStrategy's senior notes offering?

The notes do not bear regular interest and may limit short-term cash flow.