Technology company MicroStrategy (Nasdaq: MSTR) has announced its third debt offering of 2024, aiming to raise $700 million by issuing convertible senior notes due in 2028.
MicroStrategy is raising money to pay off part of its existing debt. According to an announcement, the proceeds will be used to pay off $500 million in existing senior secured notes and to purchase more Bitcoin, with any remaining funds going to general corporate purposes. Refinancing is a common practice among companies. It involves replacing existing debt with new debt, often to take advantage of more favorable terms.
The notes will be unsecured and pay interest beginning in March 2025, said the company. The offering is available only to qualified institutional buyers.
This is MicroStrategy third debt offering of 2024. In March, the company raised around $700 million in a debt offering, followed by a similar issuance in June of $500 million worth of convertible senior notes maturing in 2032.
According to MicroStrategy, the offerings are part of an ongoing strategy of leveraging debt raises to acquire Bitcoin (BTC). The company is one of the cryptocurrency’s largest public holders in the world, with 244,800 BTC worth around $14 billion on its balance sheet as of Sept. 13.
MSTR 12-months performance. Source: Google Finance
The large chunk of BTC has been impacting the company’s financials. MicroStrategy posted a net loss of $102.6 million or $5.74 per share in the second quarter of 2024, a sharp drop compared to a $22.2 million net income in the same quarter last year. The loss was largely driven by $180.1 million in digital asset impairment, a result of the volatility of its large BTC holdings.
Despite analysts’ concerns about the company’s exposure to Bitcoin, its stock performance has so far paid off the risk. Its stock price has surged nearly 295% in the past 12 months, reaching $134 as of Sept. 16. To date, MicroStrategy shares have gained 96% so far in 2024.
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