Saylor’s Strategy proposes $2B in convertible notes to buy Bitcoin.
Michael Saylor’s Strategy, formerly known as MicroStrategy, has announced plans to raise $2 billion through 0% senior convertible notes in an effort to further expand its Bitcoin holdings. This move aligns with the firm’s ongoing strategy of aggressively accumulating Bitcoin, potentially adding to its existing stash of 478,740 BTC.
According to a Feb. 18 statement, the company intends to issue 0% senior convertible notes that will mature on March 1, 2030, unless earlier repurchased, redeemed, or converted.
Additionally, initial investors will have the option to purchase up to an extra $300 million worth of notes within five business days following the issuance.
Senior convertible notes are a type of debt security that can be converted into equity at a later date. They are considered senior to common stock, meaning that in the event of bankruptcy or liquidation, noteholders receive priority over common shareholders in recovering their investments.
Strategy has stated that the net proceeds from this offering will primarily be used to purchase more Bitcoin, in addition to being allocated toward general corporate purposes.
This latest fundraising effort is a key component of Strategy’s 21/21 Plan, which aims to raise $42 billion over the next three years through a combination of equity and fixed-income securities.
The objective of this plan is to continue aggressively accumulating Bitcoin, positioning the company as one of the largest institutional Bitcoin holders globally.
The 21/21 Plan was orchestrated by Strategy’s executive chairman and co-founder, Michael Saylor, a vocal Bitcoin advocate. Since the plan’s inception on Oct. 30, 2023, the company has already completed more than half of its capital-raising goals, acquiring nearly 200,000 Bitcoin during this period.
This has significantly bolstered Strategy’s total holdings, making it the largest corporate Bitcoin holder, according to BitBo’s BitcoinTreasuries.NET data.
Despite the announcement, Strategy’s stock (MSTR) did not experience a significant move. On Feb. 18, MSTR shares closed down just over 1%, and after-hours trading remained relatively flat, according to Google Finance data.
However, over the past 12 months, Strategy’s stock has surged by 372%, making it one of the best-performing stocks in the U.S. market. This surge is largely attributed to the firm’s Bitcoin acquisition strategy and the cryptocurrency’s rising price.
While Strategy’s Bitcoin purchases have coincided with Bitcoin’s price appreciation, the firm reported a net loss of $670.8 million in Q4. This suggests that, despite the firm’s bullish outlook on Bitcoin, it continues to face short-term financial challenges.
As the company moves forward with its Bitcoin-centric strategy, the upcoming $2 billion convertible note offering will play a crucial role in determining how much further it can expand its Bitcoin holdings and solidify its position as the largest corporate Bitcoin investor.
What's Your Reaction?
