MicroStrategy is a software company that provides enterprise software to help organizations analyze and improve their performance. The company plans to use the proceeds from this bond offering to buy 30% of the outstanding shares of the Bitcoin-focused company CryptoCurrency Solutions, Inc. (CCS).
MicroStrategy Inc. is the dominant provider of business analytics software in the world, with over $10 billion in annual sales of its flagship suite of software products. The company’s shares briefly hit an all-time high in February after Alibaba Group Holding, one of its fastest growing customers, said it would pay $8.25 billion for a majority stake in the business intelligence provider’s digital currency subsidiary, Blockchain.
If you are a fan of the world’s most famous cryptocurrency, Bitcoin, you may be interested to know that MicroStrategy Inc. (NASDAQ: MSTR) has agreed to buy it. The company, which is a giant in the world of enterprise software, said it has agreed to a $1.6 billion junk bond offering to buy Bitcoin (BTC).Software company MicroStrategy has raised $1.6 billion in a non-standard bond issue, four times the amount originally requested. Earlier this week, the company announced plans to issue $400 million worth of non-standard bonds in a private placement and buy bitcoin (BTC) with the proceeds. Junk bonds are debt securities issued by companies that are not investment grade and generally offer investors a higher return, but also carry a higher risk. Bond yields range from 6.125% to 6.25%, which is higher than government bond yields. The notes are fully and unconditionally guaranteed by MicroStrategy Services Corporation, a wholly owned subsidiary of MicroStrategy, and certain subsidiaries of MicroStrategy that may be formed or acquired after the closing of the offering, MicroStrategy said in a statement. A day later, the company announced it would increase its bond issue to $500 million, which was followed by orders for $1.6 billion. MicroStrategy currently has the most bitcoins of any publicly traded company on its balance sheet, worth about $3.2 billion, more than double the value of the bitcoins held by Tesla ($1.4 billion). MicroStrategy’s stock price has spent most of 2020 and 2021 rising with the rising price of bitcoin. But keeping bitcoin on the balance sheet wasn’t enough to save MicroStrategy shares from the crash that eventually came when the cryptocurrency market collapsed. Since bitcoin’s peak in early April, MicroStrategy’s share price has fallen 45%. MicroStrategy also announced the formation of a new subsidiary holding 92,079 bitcoins called MacroStrategy LLC. Reactions to the news on social media were generally mixed. Bitcoin supporters celebrated the news by pointing to the huge excess demand for MicroStrategy bonds. MicroStrategy offered $400 million in bonds to buy more #bitcoin and received $1.6 billion in interest. They got four times what they proposed. – Bitcoin documenting (@DocumenterBTC) June 8, 2021 Crypto skeptic Peter Schiff questioned the wisdom of buying an asset that is historically volatile. Schiff asked how the sudden drop in the price of bitcoin would affect MicroStrategy. I don’t think @michael_saylor is familiar with Murphy’s Law. What happens when #Bitcoin crashes below $20K? Will MicroStrategy sell shares at undervalued prices to strengthen its balance sheet? Is she going to sell bitcoins to get money? If MicroStrategy goes bankrupt, will the creditors buy back the bitcoins? – Peter Schiff (@PeterSchiff) June 8, 2021 Let’s wait and see what happens.Why is MicroStrategy deciding to buy Bitcoin now? Just a few months ago, the company signed a $1.65 billion deal to buy cryptocurrency exchange company Coinsetter, which at this time did not include Bitcoin. With that buyout, it is clear that MicroStrategy wants a piece of the Bitcoin action. The company is known for its STRATOS platform, which is a relationship management tool that helps companies develop, maintain, and execute on strategies that optimize and maintain relationships with their customers. By acquiring Coinsetter, MicroStrategy gains a platform to help Bitcoin exchanges continue to operate.. Read more about microstrategy bond offering and let us know what you think.
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