MicroStrategy has revealed its plan to issue $500 million in convertible senior notes set to mature in 2032.
The private offering, targeted at qualified institutional buyers, will comply with Rule 144A of the Securities Act of 1933 and is dependent on market conditions and other factors.
The company’s CEO, Michael Saylor, stated that the net proceeds from the offering will mainly go towards acquiring additional Bitcoin (BTC) and for general corporate purposes. This move is in line with MicroStrategy’s long-term strategy of using BTC as its treasury reserve asset.
In terms of the private offering, MicroStrategy expects to provide initial purchasers of the notes the opportunity to purchase an additional $75 million in aggregate principal amount of the notes. The specifics of the notes, such as the interest rate, initial conversion rate, and other terms, will be determined at the time of pricing.
Regulatory considerations state that the notes will be offered and sold to qualified purchasers under Rule 144A of the Securities Act of 1933. This means that the convertible senior notes and any convertible shares of MicroStrategy’s class A common stock will not be registered with the Securities and Exchange Commission (SEC). Therefore, they cannot be traded in public markets without meeting specific legal requirements.
In another development, it has been pointed out that ‘Bitcoin Layer 2s’ are not true Layer 2 solutions, and the distinction is crucial for understanding their functionality.