MicroStrategy Inc., today announced that it intends to offer, subject to market conditions and other factors, $400 million aggregate principal amount of senior secured notes due 2028 in a private offering to qualified institutional buyers. The offering is subject to market and other conditions and there can be no assurance as to whether, when or on what terms the offering may be completed.
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. The notes and the related guarantees will be secured, on a senior secured basis with MicroStrategy’s existing and future senior indebtedness, by security interests on substantially all of MicroStrategy’s and the guarantors’ assets, including any Bitcoins or other digital assets acquired on or after the closing of the offering, but excluding MicroStrategy’s existing Bitcoins as well as Bitcoins and digital assets acquired with the proceeds from existing Bitcoins. MicroStrategy’s existing approximately 92,079 Bitcoins will be held by a newly formed subsidiary, MacroStrategy LLC.
The added purchase of Bitcoin would seem to be a doubling down of sorts, for even as the company expressed its intention to buy more of the leading cryptocurrency, it warned that based on the fluctuations of the price of bitcoin during the Q2 to the present date, it considers taking an impairment of at least $284.5 million for the quarter ending June 30.
It is not the first time the company is raising money to buy Bitcoin. The first was in December 2020, where the company also raised $400 million to buy the flagship cryptocurrency but it was done by notes that were convertible into the company’s shares. This time, the notes are to be guaranteed on a senior secured basis by MicroStrategy Services Corp, a subsidiary of MicroStrategy.
What it means
After the Miami 2021 conference, in which CEO Michael Saylor spoke, he appears to have found a new drive to invest more into Bitcoin. This massive investment into Bitcoin will definitely mop up the supply and push the price of Bitcoin upward.
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MicroStrategy (MSTR) share price is currently down 2.87% for the day, trading at $470.75. The company’s shares had soared to a two-decade high of $1,315 in February, thanks to the surging bitcoin price during that same period but have plummeted almost 65% since then, following Bitcoin’s trend.