In this offering, which was increased from the previously disclosed $600 million, the notes will be sold in a private offering to individuals deemed qualified institutional buyers depending on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”).

Additionally, MicroStrategy gave the notes’ original buyers the chance to buy up to an extra $100 million in a principal amount over 13 days, starting on the day of issuance. The offering is expected to close on March 8, 2024, subject to customary closing conditions.

The notes will have a maturity date of March 15, 2030, and will bear interest at a rate of 0.625% per annum. They will be convertible into cash, shares of MicroStrategy’s class A common stock, or a combination of both, at the company’s election.

The initial conversion rate for the notes has been set at 0.6677 shares of MicroStrategy class A common stock per $1,000 principal amount of notes. This is 42.5%, roughly valued at $1,497.68 per share more than the MicroStrategy class A common stock’s latest recorded sale price on March 5, 2024.

The offering is expected to close on March 8, 2024, subject to customary closing conditions. The notes are being sold in a private offering to qualified institutional buyers and will not be registered under the Securities Act.pen_spark

MicroStrategy can redeem notes for cash after March 22, 2027, at 100% of principal plus accrued interest if its stock price is at least 130% of the conversion price for a specified period before the redemption notice. 

In addition, holders may demand that their notes be repurchased at 100% of the principal amount plus accrued interest on September 15, 2028, or in the event of certain fundamental change events. MicroStrategy might need to boost note holders’ conversion rates in certain circumstances.

The notes, which will be senior liabilities of MicroStrategy and unsecured, will have an annual interest rate of 0.625%. They will be payable semi-annually in arrears on March 15 and September 15 of every year, beginning on September 15, 2024. If not sooner bought, redeemed, or converted by their conditions, as they will mature on March 15, 2030.

After subtracting discounts, fees, and offering costs, MicroStrategy projects net proceeds from the sale of the notes to be roughly $684.3 million (or $782.0 million if the first purchasers exercise their option in full). The corporation plans to use these profits for normal business objectives and the purchase of more bitcoin.

The offer and sale of the notes and shares issuable upon conversion have not been registered under the Securities Act or the securities laws of any other jurisdiction; instead, the notes are being sold to qualified institutional buyers following Rule 144A.

As a result, unless they are registered or qualify for an appropriate exemption, they cannot be offered or sold in the United States.

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