MicroStrategy, a company known for its aggressive investments in bitcoin, has announced that it plans to raise up to $600 million through a convertible bond offering to buy more bitcoin. This follows the company’s previous purchase of more than 15,000 BTC, worth nearly $1 billion, since the beginning of the year, mainly funded by a similar bond issuance.

MicroStrategy uses debt for bitcoin

The company, led by bitcoin proponent Michael Saylor, has become a funded player in the bitcoin market, according to JPMorgan analysts. They have expressed concerns that MicroStrategy’s reliance on debt to finance bitcoin purchases could contribute to excessive market rallies and increase the risk of major deleveraging in future downturns. The warning comes amid a recent sharp decline in the bitcoin price, which fell about 4% to around $68,000 despite previously hitting an all-time high of over $73,000.

MicroStrategy bonds

In a statement released on March 15, MicroStrategy shared the pricing details of its latest senior convertible note offering. The company plans to issue the bonds for $525 million, with an option for buyers to receive up to an additional $78.5 million from the issuance. The expected proceeds from this offering are between $515 million and approximately $592.3 million. The bonds, which mature in March 2031, will bear an annual interest rate of 0.875%, payable semiannually.

Investors who own these bonds have certain rights, including the ability to request redemptions under certain conditions and the flexibility to convert their bonds into cash or shares of MicroStrategy’s Class A common stock. The conversion rate for these bonds is set at $2,327.31 per share, which represents a large premium of approximately 40% to MicroStrategy’s average share price of $1,662.20. The sale is expected to close on March 18.

Source: https://bitcoinmagazine.nl/nieuws/microstrategy-bitcoin-kopen-schulden

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