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Strategy 8-K Report, Corporate Update (Jun 14, 2024)

Reports
Other Events·Exhibits & Filings
Filing Date
Filed June 14, 2024
Period End
June 13, 2024
In the record · 2016–202610-K1110-Q338-K265

MSTR filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 265 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Jul ’20Jul ’20
  2. Material agreement8-K · Sep ’22Sep ’22
  3. Leadership change8-K · Oct ’26Oct ’26

01—Abstract

Summary

Summary of the 8-K filed June 14, 2024. Cited figures are marked; the original filing is the authoritative source.

On June 13, 2024, MicroStrategy Incorporated announced its intention to offer $500 milliona of convertible senior notes due 2032 in a private offering to qualified institutional buyers under Rule 144A, with an option for initial purchasers to buy an additional $75 million.

On June 14, 2024, the company announced it had priced a upsized offering of $700 millionb aggregate principal amount of 2.25% convertible senior notes due June 15, 2032, with an option for up to an additional $100 million. The offering is expected to close on June 17, 2024, subject to customary closing conditions. Net proceeds are estimated at approximately $687.8 million, or approximately $786.0 million if the option is exercised in full, after discounts, commissions and estimated expenses.

The company intends to use the proceeds to acquire additional bitcoin and for general corporate purposes. The notes are unsecured senior obligations and can be settled in cash, Class A common stock, or a combination, at the company's election. The initial conversion price is approximately $2,043.32c per share, a premium of about 35% over the $1,513.46 VWAP on June 13, 2024.

The notes are redeemable for cash by the company on or after June 20, 2029, subject to conditions, and holders may require repurchase on June 15, 2029. Separately, the company delivered a notice of full redemption for its outstanding 0.750% Convertible Senior Notes due 2025, with an aggregate principal amount of $650.0 milliond, to be redeemed on July 15, 2024 at 100% of principal plus accrued interest. Because of the notice, holders may convert the 2025 Notes until 5:00 p.m.

New York time on July 11, 2024, at a conversion rate of 2.5126 shares per $1,000 principal (about $397.99 per share). The company has elected to settle conversions in shares of Class A common stock, with cash in lieu of fractional shares.

02—Key points

Key Highlights

  1. Upsized convertible notes offering: priced at $700 million of 2.25% convertible senior notes due 2032, up from the initially announced $500 million, with a $100 million option for initial purchasers.
  2. Estimated net proceeds of approximately $687.8 million ($786.0 million if the option is fully exercised), earmarked for acquiring additional bitcoin and general corporate purposes.
  3. Initial conversion price of approximately $2,043.32 per share, a premium of about 35% over the $1,513.46 VWAP on June 13, 2024.
  4. Notes are settleable in cash, Class A common stock, or a combination at the company's election; the company may redeem for cash on or after June 20, 2029, subject to conditions.
  5. Full redemption of the $650.0 million 0.750% Convertible Senior Notes due 2025 on July 15, 2024, at 100% of principal plus accrued interest.
  6. Conversion window for 2025 Notes holders runs until 5:00 p.m. New York time on July 11, 2024, at 2.5126 shares per $1,000 principal (about $397.99 per share), with conversions settled in Class A shares.
  7. The offering is expected to close on June 17, 2024, subject to customary closing conditions.

03—Questions

Frequently Asked Questions

  1. How much capital did the company raise in the new convertible notes offering?

    The company priced $700 million aggregate principal amount of 2.25% convertible senior notes due 2032, with an option for initial purchasers to buy up to an additional $100 million. Estimated net proceeds are about $687.8 million, or about $786.0 million if the option is exercised in full.

  2. What will the proceeds be used for?

    The company intends to use the net proceeds to acquire additional bitcoin and for general corporate purposes.

  3. What is the conversion price of the new notes and how does it compare to the market price?

    The initial conversion price is approximately $2,043.32 per share, a premium of about 35% over the $1,513.46 U.S. composite VWAP of Class A common stock on June 13, 2024.

  4. What happens to the outstanding 0.750% Convertible Senior Notes due 2025?

    The company delivered a notice to redeem all $650.0 million of the 2025 Notes on July 15, 2024, at 100% of principal plus accrued and unpaid interest. Holders may convert until 5:00 p.m. New York time on July 11, 2024, at a rate of 2.5126 shares per $1,000 principal, and the company will settle conversions in Class A common stock.

  5. When can the company or noteholders require redemption or repurchase of the new notes?

    The company may redeem the notes for cash on or after June 20, 2029, subject to certain conditions, and holders may require repurchase on June 15, 2029. The notes mature on June 15, 2032.

04—Continue

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