TYSONS CORNER, Va. - MicroStrategy Incorporated (NASDAQ:MSTR), a company specializing in enterprise analytics and mobility software, has upsized its private offering of convertible senior notes to $700 million, an increase from the previously announced $500 million. The notes, due in 2032, will be sold to qualified institutional buyers, with an additional $100 million option available to initial purchasers for a limited period.
The offering, scheduled to close on June 17, 2024, is subject to customary closing conditions. The notes, unsecured senior obligations of MicroStrategy, will carry an interest rate of 2.25% per annum, payable semi-annually, and will mature on June 15, 2032, unless repurchased, redeemed, or converted earlier as per the terms.
Under certain conditions, after June 20, 2029, MicroStrategy may redeem the notes in cash at 100% of the principal amount plus accrued interest. Noteholders have the right to require MicroStrategy to repurchase their notes on June 15, 2029, or upon the occurrence of specific events at the same price.
The notes will be convertible into cash, shares of MicroStrategy’s class A common stock, or a combination thereof, at the company's discretion. The initial conversion rate is set at 0.4894 shares per $1,000 principal amount of notes, which corresponds to an initial conversion price of approximately $2,043.32 per share. This rate is subject to adjustment in certain circumstances.
MicroStrategy estimates net proceeds from the offering to be approximately $687.8 million, or $786.0 million if the additional notes option is fully exercised, after deducting discounts, commissions, and estimated offering expenses. The company plans to use the proceeds to acquire additional bitcoin and for general corporate purposes.
The notes, as well as the shares of MicroStrategy's class A common stock potentially issued upon conversion, have not been registered under the Securities Act of 1933 or any state securities laws, and unless so registered, may not be offered or sold in the United States absent an exemption from such registration requirements.
The information reported is based on a press release statement.
In other recent news, MicroStrategy Incorporated has been the subject of several significant developments. The company received an Outperform rating from Bernstein SocGen Group, which cited the firm's strong Bitcoin strategy and projected a 50% premium to its Bitcoin Net Asset Value by 2025.
In addition, MicroStrategy declared its intention to fully redeem its 0.750% Convertible Senior Notes due 2025, involving an aggregate principal amount of $650 million. This move will address all outstanding notes currently held by investors.
Canaccord Genuity maintained a Buy rating on MicroStrategy and raised its price target to $2,047, based on the company's strategic approach to leveraging digital assets and the optimistic outlook for Bitcoin.
Furthermore, MicroStrategy was included in the MSCI all-country world index, a development that affects global investors and fund managers. These recent developments reflect the company's active engagement in financial strategies and its significant presence in the Bitcoin market.
InvestingPro Insights
MicroStrategy Incorporated's (NASDAQ:MSTR) recent decision to upsize its convertible senior notes offering reflects a strategic move to bolster its financial position. The initiative to acquire additional bitcoin signals the company's continued investment in cryptocurrency as a core part of its business model. Here are some key metrics and tips from InvestingPro that could help investors gain a deeper understanding of the company's financial health and market performance:
InvestingPro data reveals that MicroStrategy boasts an impressive Gross Profit Margin of 77.12% for the last twelve months as of Q1 2024, indicating a strong ability to retain revenue after the cost of goods sold is deducted. Despite this, the company's Revenue Growth during the same period is at -2.45%, showing a slight contraction. Moreover, the Operating Income Margin stands at -60.96%, highlighting challenges in managing operating expenses relative to revenue.
One of the notable InvestingPro Tips for MicroStrategy is the company's impressive gross profit margins, which could provide some cushion against financial headwinds. However, it is worth noting that two analysts have revised their earnings downwards for the upcoming period, suggesting potential concerns about the company's future profitability.
For investors looking to delve deeper into MicroStrategy's financials and market performance, InvestingPro offers additional insights. There are 15 more InvestingPro Tips available, which could be particularly useful for understanding the company's complex financial strategies and market position. To explore these further, visit InvestingPro's MicroStrategy page. Remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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