MicroStrategy, the world’s largest publicly traded business intelligence company, has announced plans to invest the proceeds from a $ 400 million securities offering in Bitcoin.
On December 7, the firm disclosed plans to issue $ 400 million in convertible senior notes – a debt security that can be converted into shares of the issuing company. The announcement stated:
“Microstrategy plans to invest the net proceeds from the sale of the banknotes in Bitcoin.”
At current prices, the $ 400 million holdings of the company would increase by 20,833, bringing the company’s total crypto inventory to nearly 62,000 BTC.
Microstrategy pays semi-annual interest to note holders until December 2025. The firm also reserves the right to exchange the notes for cash from December 20, 2023.
The announcement states that MicroStrategy may also offer up to $ 60 million in additional bonds to its first-time buyers within 13 days of the offering commencing.
The securities will be issued under Rule 144 of the Securities Act and are available only to qualified institutional investors.
In response to MicroStrategy’s announcement, Gabor Gurbacs, the CEO of New York-based investment firm VanEck, suggested the offering is more indicative of a digital asset fund than a publicly traded company:
At what point does a securities offering that raises dollars to invest in Bitcoin makes a publicly traded company a publicly traded fund / investment company?
– Gabor Gurbacs (@gaborgurbacs) December 7, 2020
MicroStrategy caused a furore in the crypto world in August when the company revealed that it had adopted Bitcoin as its primary reserve after purchase 21,454 BTC for $ 250 million. It then bought another 16,796 BTC for $ 175 million the next month. The purchases were made through Coinbase’s OTC and brokerage platform.
Just a few days ago, on December 5, MicroStrategy CEO Michael Saylor, announced the company had bought another 2,574 BTC for about $ 19,427 each for $ 50 million, bringing its total crypto holdings to about 40,824 BTC.
At current market value, MicroStrategy’s BTC inventory is worth nearly $ 784 million, meaning the company is currently 65% higher than its $ 475 million investment.