On June 7, MicroStrategy announced that it would raise $ 400 million to buy Bitcoin. It will place a bond issue maturing in 2028. Later, the CEO of the company, Michael Saylor, announced that the amount was increased to $ 500 million. Initially, the proposed $ 400 million at the time of the disclosure of the plan on Monday was no longer in line with demand, Bloomberg notes. At the same time, even after the increase, demand exceeded supply. Since the volume of applications amounted to $ 1.6 billion. This is four times more than the originally announced amount. MicroStrategy has received bids from interested investors. Including a large number of hedge funds, that haven’t previously participated in the purchases. Due to the lack of interest payments on these securities.
According to analysts, the huge demand for hedge funds is due to the proximity of the bottom of Bitcoin. The cryptocurrency has lost 50% of its value since spring amid the global economic recovery. It looks more like a correction than a protracted fall, which has reached its maximum boundaries.
The company said that all of its $ 400mn bonds were sold on June 8, with the final placement scheduled to close by June 14.
MicroStrategy also set the bond yield at 6.125% per annum, which is less than in earlier discussions when it came to 6.25-6.5%.
Debt securities will be secured by the company’s assets, including Bitcoin, purchased during and after the placement. Coins already owned by MicroStrategy (92,079 BTC, according to Bitcoin Treasuries) are not included in the guarantees.
Demand for MicroStrategy bonds exceeds all expectations
MicroStrategy attracts new funding amid the ongoing rollback of Bitcoin from the highs of about $ 65,000 round at the desired mark. However, as we can see, the demand exceeded all expectations. In addition, together with the latest investments, the number of Bitcoins in MicroStrategy’s reserves expected to exceed 100 thousand coins.
The company currently has about 92,079 BTC in its reserves. MicroStrategy also reports that the total value of all Bitcoin coins in the company’s account is in the order of $ 2.25 billion. At the same time, the average price is about $ 24,450 per coin. Earlier in reporting to the US Securities and Exchange Commission, MicroStrategy wrote that its quarterly loss due to the decline in Bitcoin will be about $ 284.5 million. This amount exceeds the total earnings of the company since 2011, excluding investments in cryptocurrency.
Previously offered bonds
In December 2020, the firm placed $ 650 million unsecured convertible senior bonds to raise funds for digital gold purchases. The amount exceeded its target by $ 100 million and initially surpassed the target by $ 250 million.
In February 2021, MicroStrategy sold similar securities to investors in the amount of $ 1.05 billion.
Recall that the CFO of the firm Phong Le called the investment in Bitcoin the direct responsibilities of technology companies.