MicroStrategy Raises $563 Million in Debt-Like Offering to Fund Bitcoin Purchases
MicroStrategy Inc. (MSTR) has announced a debt-like equity offering that raised $563 million. The funds will be used to finance its ongoing purchases of Bitcoin (BTC-USD).
The perpetual strike preferred stock was sold for $80 per share, below the liquidation preference of $100. This suggests that the deal was more favorable to investors than initially proposed to retail traders and institutions.
The stock will pay investors an 8% fixed coupon and has a $1,000 conversion price. This means that the stock would need to nearly triple from its current value to convert into common stock.
The offering exceeded the initial target of $250 million. MicroStrategy had previously announced that it planned to raise up to $2 billion through perpetual preferred offerings in the first quarter of 2023.
The structure of the offering is novel for MicroStrategy, which has typically relied on convertible debt and at-the-market share sales to raise funds for Bitcoin purchases. This offering appeals to a wider range of investors, including those seeking high yield returns.
The perpetual preferred stock will be senior to Class A common stock and will pay a regular quarterly dividend beginning on March 31, 2023. The dividend can be paid in cash or shares.
MicroStrategy has accumulated billions of dollars worth of Bitcoin since 2020. Chairman and co-founder Michael Saylor has been a vocal advocate for cryptocurrency investments.
Barclays, Moelis & Company LLC, BTIG, TD Cowen, and Keefe, Bruyette & Woods served as book-running managers on the offering.