According to Cointelegraph, technology company MicroStrategy (Nasdaq: MSTR) has announced its third debt offering of 2024, aiming to raise $700 million by issuing convertible senior notes due in 2028. The company plans to use the proceeds to pay off $500 million in existing senior secured notes and to purchase more Bitcoin, with any remaining funds allocated to general corporate purposes. Refinancing is a common practice among companies, involving the replacement of existing debt with new debt, often to take advantage of more favorable terms.
The notes will be unsecured and will begin paying interest in March 2025. The offering is available only to qualified institutional buyers. This marks MicroStrategy's third debt offering of the year. In March, the company raised around $700 million in a debt offering, followed by a similar issuance in June of $500 million worth of convertible senior notes maturing in 2032.
MicroStrategy's strategy involves leveraging debt raises to acquire Bitcoin (BTC). The company is one of the largest public holders of the cryptocurrency, with 244,800 BTC worth around $14 billion on its balance sheet as of September 13. The substantial BTC holdings have impacted the company's financials. MicroStrategy posted a net loss of $102.6 million, or $5.74 per share, in the second quarter of 2024, a sharp drop compared to a $22.2 million net income in the same quarter last year. The loss was largely driven by $180.1 million in digital asset impairment, a result of the volatility of its large BTC holdings.
Despite analysts' concerns about the company's exposure to Bitcoin, its stock performance has so far mitigated the risk. The stock price has surged nearly 295% in the past 12 months, reaching $134 as of September 16. To date, MicroStrategy shares have gained 96% in 2024.
