MicroStrategy plans to issue $400 million convertible bonds to increase its current investment in the flagship cryptocurrency Bitcoin.
December 8, 2020, | AtoZ Markets – Analytics software provider MicroStrategy Incorporated has announced its intention to place $400 million of convertible senior notes due 2025.
MicroStrategy Announces Proposed Private Offering of $400 Million of Convertible Senior Noteshttps://t.co/KvZNIbO6Fa— Michael Saylor (@michael_saylor) December 7, 2020
MicroStrategy to make additional Bitcoin investment
The company plans to invest proceeds from the placement in Bitcoin in accordance with its policy of managing reserves.
According to the announcement, the convertible bonds with a maturity of 5 years will be sold only to qualified institutional investors.
The notes will be MicroStrategy’s unsecured priority commitments. Interest will be charged on them every six months. The maturity date is December 15, 2025, if the company does not buy back or convert the securities earlier in accordance with the terms of their issue. After December 20, 2023, MicroStrategy may redeem all or part of the notes.
The company will convert the notes into cash, class A ordinary shares, or a combination of these assets.
In August, MicroStrategy was the first company listed on the Nasdaq to convert some of its capital into bitcoin. The company bought 21,454 bitcoins- approximately $250 million at the time.
In September, the firm ramped up investments in the first cryptocurrency in line with the new reserve management policy and acquired an additional 16,796 bitcoins for $175 million.
As AtoZ Markets reported on December 5, MicroStrategy made its third investment in Bitcoin after buying another 2,754 bitcoins at $19,427 each—worth a total of $50 million.
MicroStrategy remains bullish on Bitcoin
Though the price of Bitcoin has since risen considerably and just this week hit an all-time high near the $20,000 mark, MicroStrategy and its Bitcoin-evangelizing CEO clearly remain bullish.
At the moment, however, many traders believe that Bitcoin is at risk of seeing a deeper pullback to $18,600 following its recent rejection.
Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said that BTC’s fall from $19,100 with a strong reaction from sellers makes a larger drop likely. He wrote:
“Couldn’t break through $19,400 as the crucial breaker, after which a drop occurred towards $18,800. $19,100 area instantly rejected and the likelihood of a drop towards $18,600 increases.”
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