MicroStrategy is offering $ 400 million in senior secured notes to private investors to raise funds to purchase more bitcoins. The company also announced two new subsidiaries.
MicroStrategy, the publicly traded software company, keeps reaffirming its commitment to Bitcoin (BTC) after revealing its intentions, on Monday, to raise $ 400 million through senior secured notes, a type of debt offering, with the sole intention of using the net proceeds to acquire more bitcoins.
The firm, which is at the hands of digital currency enthusiast Michael Saylor, has already allocated more than $ 2 billion to Bitcoin investment and does not appear to have plans to stop yet. According to a statement, MicroStrategy will now offer senior secured notes due 2028 to acquire more BTC.
The company’s plan also adds to its agenda two new subsidiaries: MicroStrategy Services Corporation and MacroStrategy LLC. The first subsidiary will grant the new notes if they meet the proper issuance and will secure them with the bitcoin that it acquires, as detailed in the statement.
A Total Amount of $ 400 Million in Senior Secured Notes
The bonds will be granted fully and unconditionally on a senior insured basis, jointly and severally, by MicroStrategy Services Corporation, a subsidiary of MicroStrategy, and certain MicroStrategy subsidiaries that may be acquired after the closing of the offering.
The statement also explains in detail that the company will try to offer, under market conditions and other factors, a total amount of USD 400 million in senior secured notes due 2028 in a private offering to qualified institutional purchasers.
It is also important to consider that only investors qualified by SEC rules can take part in the “private sale” of said notes, which are a kind of collateral debt that can turn into cash or stocks. As for backing, the notes will meet safety with MicroStrategy’s existing assets, including any Bitcoin purchased from the notes’ proceeds, but excluding the firm’s existing bitcoins.
MicroStrategy Keeps Adding BTC
This is not the first time that MicroStrategy has offered convertible notes intending to raise funds to buy Bitcoin. As reported, the company previously sold $ 1.05 billion in private notes to invest in the cryptocurrency. The most recent growth happened in February when it announced a mutual fund of $ 900 million in senior convertible notes.
The latest bitcoin acquisition plans are part of a MicroStrategy hedging strategy to allocate funds to the major cryptocurrency. The company has been adding Bitcoin to its treasury since last year and amassed more than 92,000 BTC.
The company’s structural change related to the formation of subsidiaries also shows that MacroStrategy LLC will now be in charge of managing MicroStrategy’s holdings in Bitcoin.
In other MicroStrategy news, the company intends to provoke an impairment loss of at least $ 284.5 million related to its Bitcoin holdings for the three months after June 30, 2021. This news appeared in a document from the US Securities and Exchange Commission (SEC) dated June 7. The price of Bitcoin has fallen around 45% in recent weeks, from its high of $ 64,500 in mid-April, to close with $ 36,000.
By: Jenson Nuñez