MicroStrategy’s Bold Bet on Bitcoin
Raising the Stakes with $563 Million Debt-Like Equity Offering
In a move that’s sending shockwaves through the financial world, MicroStrategy Inc. has successfully raised a staggering $563 million through a debt-like equity offering. The funds will be used to finance the company’s ambitious plans to purchase even more Bitcoin, further solidifying its position as a major player in the cryptocurrency market.
A Novel Approach to Raising Capital
The perpetual preferred stock offering, priced at $80 per share, marks a departure from traditional convertible debt and at-the-market share sales. This innovative approach has attracted a wider range of investors, including those seeking higher yields. The stock comes with an 8% fixed coupon and a $1,000 conversion price, which would require the stock to nearly triple from its current value.
A Shift in Strategy
MicroStrategy’s decision to explore perpetual preferred offerings is a significant shift in its capital-raising strategy. The company had initially targeted $250 million but ended up raising more than double that amount. This bold move is part of a larger plan to raise as much as $2 billion in the first quarter, as announced earlier this month.
A High-Yield Opportunity
The perpetual preferred stock offers a regular quarterly dividend beginning on March 31, payable in cash or shares. This attractive feature has drawn in investors seeking relatively high yields, particularly compared to MicroStrategy’s recent convertible notes with 0% coupons. The stock will be senior to Class A common stock, providing an added layer of security for investors.
A Billion-Dollar Bet on Bitcoin
MicroStrategy’s commitment to Bitcoin is unwavering. The company has already pooled billions from its plan to raise $42 billion through dilutive offerings, with a significant portion allocated to purchasing the cryptocurrency. Currently, MicroStrategy holds approximately $50 billion in Bitcoin, making it one of the largest holders of the digital asset.
A Leader in the Digital Asset Industry
Michael Saylor, MicroStrategy’s chairman and co-founder, has been a vocal advocate for Bitcoin, viewing it as an inflation hedge and alternative to holding cash. Since the election of US President Donald Trump, Saylor has accelerated the company’s purchase of Bitcoin, cementing MicroStrategy’s position as a leader in the digital asset industry.
A Team Effort
The successful debt-like equity offering was made possible through the efforts of several book-running managers, including Barclays, Moelis & Company LLC, BTIG, TD Cowen, and Keefe, Bruyette & Woods.
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