MicroStrategy to Sell $400 Million in Bonds for Bitcoin Purchases

The company is expecting to post a loss of $284.5 million in Q2.

MicroStrategy Inc (NASDAQ: MSTR) has decided to hoard more Bitcoins and is intending to sell $400 million worth of senior secured notes in a private offering to institutional buyers.

The notes will be due in 2028, and the claims will be guaranteed by the business and ‘any bitcoins or other digital assets’ which the company will acquire after the closure of the fundraising. However, investors cannot claim the Bitcoins purchased by the firm previously.

“The notes will be fully and unconditionally guaranteed on a senior secured basis, jointly and severally, 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 detailed.

Currently, the business analytics company holds more than 92,000 Bitcoins, and the fresh purchase will take the total count to more than 100,000 Bitcoins, based on the current prices.

Upcoming Losses

However, in a regulatory filing on Monday, the company said that it is expecting to post a loss of $284.5 million in the next earnings report due to the volatility in Bitcoin prices.

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The company’s move failed to impress the traders as the MicroStrategy shares went down by more than 3 percent at the closing of Monday’s trading hours. Additionally, its $1 billion convertible note due 2027 is also trading at a discount.

MicroStrategy sells data analytics software and services to businesses. But, its core business has hardly shown any growth in a decade: its revenue went up to over $480 million last year from the amount recorded in 2010 of $455 million.

However, its CEO’s interest in Bitcoin has pushed the company stocks to soar high. MicroStrategy first bought $250 million worth of Bitcoin last August and sold a total of $1.6 billion in convertible bonds last year for its Bitcoin purchases. It has started the trend of adding Bitcoin to the balance sheets, which pushed companies like Tesla and several other public companies to do the same.

Despite the recent correction in the Bitcoin price, MicroStrategy CEO Michael Saylor is optimistic about Bitcoin’s future and is still holding onto all Bitcoins.

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