MicroStrategy is devising a new strategy to be able to increase its stock of Bitcoins (BTC). The company plans to issue bonds, the net proceeds of which will buy BTC.
Bonds to acquire Bitcoins
December 7, 2020, MicroStrategy announces plans to issue senior convertible bonds valued at $ 400 million.
This type of bond can be converted into shares of the issuing company. The corresponding press release stated that MicroStrategy invest the net proceeds of the sale in the acquisition of new Bitcoins.
At the current price, the value of these securities represents 20,833 BTC, bringing the company’s assets to 62,000 BTC.
Semi-annual interest will be paid to holders of these bonds until December 2025.
The company reserves the right to redeem these bonds in cash from December 20, 2023.
BTC funds in priority
The issuance of these securities will be carried out in accordance with Article 144 of the Securities Law of Securities Act and, only qualified institutional investors will be able to participate.
On Twitter, the CEO of the investment company VanEck, Gabor Gurbacs, mentioned that this offer was more appropriate for an investment fund BTC rather than a publicly traded company.
In August 2020, MicroStrategy had done Bitcoin its first reserve asset, after having acquired 21,454 BTC for $ 250 million.
The following month, the firm had purchased 16,796 BTC additional for $ 175 million.
A few days earlier, on December 5, 2020, Michael saylor reported that the company had acquired 2,574 BTC for a unit price of $ 19,427, for a total estimated value of $ 50 million.
At the current market price, the company’s total holdings are around 784 million, which is an increase of about 65% from the initial investment of $ 475 million.
Bitcoin can therefore count on institutional investors like MicroStrategy or Grayscale, to buy troughs, following a possible significant drop in its price. 2020 will have been the year of bitcoin institutional investors, with institutional investors taking the BTC turn and supporting the rally that took BTC to a new ATH without hitting $ 20,000 yet. It remains to be seen whether the issuance of these bonds by MicroStrategy will have a micro or macro impact on the price of Bitcoin.
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