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MicroStrategy buys the dip as it issues $400M notes to fund additional Bitcoin (BTC) purchase

With the $400 million proceeds from the notes, MicroStategy could make an additional purchase of more than 12,100 BTCs at $32,993.26.

Image by 3D Animation Production Company from Pixabay

Tue, 08 Jun 2021, 07:48 am UTC

While other crypto investors are panicky after Bitcoin’s recent downturn, MicroStrategy remains steadfast in its conviction of the cryptocurrency’s long-term potential. Rather than selling, the business intelligence firm wants to take advantage of the current low price of BTC and plans to purchase more of the crypto.

The firm will be issuing $400M in senior secured notes to select institutional investors. “MicroStrategy 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 (the “notes”) in a private offering to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and to persons outside of the United States in compliance with Regulation S under the Securities Act,” the company said in a blog post on June 7.

Proceeds of the sale will be used by the firm to acquire more BTC, cementing its status as the publicly-listed firm with the largest Bitcoin holding. “MicroStrategy intends to use the net proceeds from the sale of the notes to acquire additional bitcoins,” the company added.

The company currently holds more than 92,000 BTC. The planned acquisition would likely bring its BTC holdings to more than 100,000 coins.

“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,” the firm explained.

However, MicroStrategy’s existing Bitcoins as well as other cryptos acquired with the proceeds from existing BTCs, will not be used to secure the notes. “MicroStrategy’s existing approximately 92,079 bitcoins will be held by a newly formed subsidiary, MacroStrategy LLC,” the company added.

At the time of writing, Bitcoin traded at $32,993.26, based on Coinmarketcap data. With the $400 million proceeds from the notes, MicroStategy could make an additional purchase of more than 12,100 BTCs.

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