Michael Saylor, CEO of Strategy (MicroStrategy renamed), revealed the details of a $2 billion loan by the company, which is most of all to buy more Bitcoin (BTC).
So, Strategy is offering $2.0 billion in 0% convertible senior notes due in 2030 exclusively to institutional investors through a private placement. Additionally, initial purchasers have the option to acquire up to an extra $300 million within five business days. The transaction is expected to close by tomorrow, Feb. 21, 2025, subject to standard closing conditions.
Godfrey BenjaminThese notes are unsecured, carry no interest and do not accrue principal. They mature on March 1, 2030, unless converted, redeemed or repurchased earlier. Until Dec. 3, 2029, conversion rights are limited to certain conditions. After this date, holders may convert at will until two days before maturity.
The initial conversion rate stands at 2.3072 shares per $1,000 principal, setting the conversion price at $433.43 - 35% above the weighted average stock price of $321.05 on Feb. 19, 2025.
Strategy has the option to redeem the notes for cash beginning March 5, 2027, provided its stock price exceeds 130% of the conversion price for a specified period. Should a "fundamental change" occur, noteholders may require the company to repurchase their notes for cash.
Yuri MolchanThe expected net proceeds amount to approximately $1.99 billion, potentially reaching $2.28 billion if additional notes are purchased. The primary use of these funds remains consistent — general corporate purposes, with a significant focus on Bitcoin acquisitions.
Strategy and Bitcoin
Currently, Strategy holds 478,740 BTC, valued at around $46.61 billion, with an average purchase price of $65,101 per BTC, reflecting a 49.53% profit.
Market observers remain divided. Many speculate that Strategy's strategy will only work if the price of BTC continues to rise. And if Bitcoin goes into a bear market, the company will be in big trouble.
The logic is that if Strategy's price falls below the conversion price, which is set at $433.43 in the most recent prospectus, and remains below the conversion price until the notes mature, Strategy may have to sell some of its BTC to pay its creditors. Now, the entire time the company was issuing these notes, the conversion price was higher than the stock price in real time.
However, as Bitcoin continued to rise and broke the $100,000 per BTC mark, the MSTR price jumped 140% since September, and from the lows to the highs it was a move from $113 to $543.
Thus, it seems that the strategy is paying off, but the skepticism remains, and participants from both the stock and crypto markets are keeping a close eye on Michael Saylor's actions, trying to catch the moment when the play turns ugly.
Dan Burgin
Vladislav Sopov