MicroStrategy selling $400 million bonds to buy Bitcoin

MicroStrategy

Road to 100,000? MicroStrategy, the publicly traded business intelligence firm, is raising $400 million by selling senior secured notes, and will use the proceeds from the bond sale to acquire additional Bitcoin.

This, even as the bitcoins it already has will likely result in a massive impairment to the tune of somewhere around $248.5 million for the quarter ending June 30.

The company announced Monday its intention to offer these secured notes due 2028 in a private offering to qualified institutional buyers. This added purchase of Bitcoin is a doubling down of sorts for the company.

MicroStrategy detailed:

“The notes will be fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by MicroStrategy Services Corporation, a wholly owned subsidiary of MicroStrategy, and certain subsidiaries of MicroStrategy that may be formed or acquired after the closing of the offering.”

While the firm has raised money to buy bitcoins from the proceeds of notes offerings before, it was always done by notes that were convertible into the company’s shares. This time is different, as the notes are to be guaranteed on a senior secured basis by a company subsidiary.

MicroStrategy clarified that the existing stash of bitcoins as well as other digital assets acquired with the proceeds from existing bitcoins will not be used to secure the notes.

A new subsidiary called MacroStrategy LLC has been formed to hold the stash:

“MicroStrategy’s existing approximately 92,079 bitcoins will be held by a newly formed subsidiary, MacroStrategy LLC. MicroStrategy intends to use the net proceeds from the sale of the notes to acquire additional bitcoins.”

The subsidiary will allow the company to have a more elegant organization structure in which that can focus on bitcoin investments separately.

At the current price of the digital asset, $36,116, this $400 million purchase would allow MicroStrategy to acquire over 11,075 BTC. This will result in the company’s stash growing to more than 103,154 bitcoins, which has always been the goal.


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