Convertible Notes Offering
On September 16, 2024, MicroStrategy Incorporated (the “Company”) issued a press release announcing its intention to offer, subject to market conditions and other factors, $700 million aggregate principal amount of convertible senior notes due 2028 in a private offering to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to grant to the initial purchasers of the notes an option to purchase, within a 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $105 million aggregate principal amount of the notes. A copy of the press release announcing the offering is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
On September 18, 2024, the Company issued a press release announcing that it has priced a private offering of $875 million aggregate principal amount of its convertible senior notes due 2028. The notes will only be sold to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act. The Company also granted to the initial purchasers of the notes an option to purchase, within a 13-day period beginning on, and including, the date on which the notes are first issued, up to an additional $135 million aggregate principal amount of the notes. The offering is expected to close on September 19, 2024, subject to satisfaction of customary closing conditions.
The Company estimates that the net proceeds of the offering will be approximately $864.1 million (or approximately $997.4 million if the initial purchasers exercise in full their option to purchase additional notes), after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by the Company. The Company intends to use the net proceeds from the sale of the notes to redeem in full all $500.0 million outstanding aggregate principal amount of the Company’s 6.125% Senior Secured Notes due 2028 (the “Senior Secured Notes”) and to use any balance of the net proceeds to acquire additional bitcoin and for general corporate purposes. Upon redemption of the Senior Secured Notes, all collateral securing the Senior Secured Notes, including approximately 69,080 bitcoins, will be released.
A copy of the press release announcing the pricing of the offering is filed as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.
2028 Senior Secured Notes Redemption
On September 16, 2024, the Company announced that it delivered a notice of conditional full redemption (the “Notice”) to the trustee of the Company’s outstanding Senior Secured Notes. The aggregate principal amount of the Senior Secured Notes being redeemed is $500.0 million, which is equal to the current aggregate principal amount of Senior Secured Notes outstanding. The Notice calls for the redemption of the outstanding Senior Secured Notes (the “Redemption”) on September 26, 2024 (the “Redemption Date”) if the Closing Condition (defined below) has been satisfied or waived by the Company as of the Redemption Date, at a redemption price equal to 103.063% of the principal amount of the Senior Secured Notes, plus accrued and unpaid interest, if any, to but excluding the Redemption Date (the “Redemption Price”).
The Company’s obligation to redeem any of the Senior Secured Notes and to pay the Redemption Price on the Redemption Date is conditioned upon the issuance and settlement, through one or more closings, by the Company of senior convertible notes in an aggregate principal amount of $600 million or more on or prior to 9:00 a.m. (ET) on the Redemption Date (the “Closing Condition”). If the Closing Condition is not satisfied or waived on or prior to 9:00 a.m. (ET) on the Redemption Date, the Company may, in its discretion: (i) delay the Redemption Date until the date the Closing Condition is satisfied; or (ii) rescind the Notice if the Closing Condition is not satisfied by the Redemption Date, or by the Redemption Date so delayed.
On the Redemption Date, assuming the Closing Condition is satisfied or waived, the applicable Redemption Price will become due and payable in respect of the Senior Secured Notes and interest on the Senior Secured Notes will cease to accrue on and after the Redemption Date to the extent that the Company does not default in the payment of the applicable Redemption Price.
