MicroStrategy has raised its convertible bond offering to $875 million, up from $700 million, aimed at buying more Bitcoin, according to a September 18 announcement. The Virginia-based company plans to issue convertible senior notes with an annual coupon of 0.625%, targeting institutional investors in a private sale with a maturity date of September 2028.
MicroStrategy also gave initial investors the option to purchase an additional $135 million of notes within 13 days of the initial offering. The company estimates net proceeds from the sale will be approximately $864.1 million. Some of these will be used to repay $500 million of 6.125% senior secured notes due in 2028, while the remainder will be used to purchase additional Bitcoin and for general corporate purposes.
If initial investors choose to purchase additional notes, the total proceeds could rise to $997.4 million. The conversion rate for the notes is set at 5.4589 shares of MicroStrategy Class A common stock for every $1,000 of par value, representing a 40% premium.
The move comes after MicroStrategy purchased 18,300 Bitcoin for $1.11 billion, bringing its total Bitcoin holdings to 244,800 BTC, worth about $9.45 billion. The company reported a 4.4% return on its BTC holdings this quarter and a 17% return year-to-date. Shares of MicroStrategy rose 2% in the latest trading session to $133.23 a share, up more than 110% over the past year.
In a related development, REX Shares and Tuttle Capital Management launched two new ETFs that offer 200% leverage (if MSTR shares rise 1%, the ETF's value will increase by about 2%) and -200% leverage (if MSTR shares fall 1%, the ETF's value will increase by about 2%). Bloomberg ETF analyst Eric Balchunas said the products are expected to be about 15 times more volatile than the S&P 500.
