01—Abstract
Summary
Summary of the 8-K filed January 31, 2025. Cited figures are marked; the original filing is the authoritative source.
MicroStrategy Incorporated (Nasdaq: MSTR) entered into an underwriting agreement on January 30, 2025 with Barclays Capital Inc., as manager and representative of the underwriters, for an underwritten offering of 7,300,000 shares of its 8.00% Series A Perpetual Strike Preferred Stock at a public offering price of $80.00a per share.
The offering is scheduled to settle on February 5, 2025, subject to customary closing conditions. The company estimates net proceeds of approximately $563.4 millionb after underwriting discounts, commissions and estimated offering expenses. MicroStrategy intends to use the net proceeds for general corporate purposes, including the acquisition of bitcoin and for working capital.
The offering is made under an effective shelf registration statement on Form S-3ASR (Registration No. 333-284510). According to the accompanying press release, the preferred stock carries a $100c per share liquidation preference and cumulative dividends at a fixed rate of 8.00% per annum, payable when, as and if declared, quarterly beginning March 31, 2025, in cash, Class A common stock, or a combination at the company's election. Holders may convert each preferred share on any business day (subject to certain limitations) into Class A common stock at an initial conversion rate of 0.1000 shares, equivalent to an initial conversion price of $1,000.00 per common share, subject to adjustment.
The company may redeem all, but not less than all, of the preferred stock for cash if the outstanding liquidation preference falls below 25%d of the amount issued in the offering, or upon certain tax events. Holders may require repurchase at the liquidation preference plus accumulated unpaid dividends upon a fundamental change.
02—Key points
Key Highlights
- Offering size: 7,300,000 shares of 8.00% Series A Perpetual Strike Preferred Stock priced at $80.00 per share
- Estimated net proceeds of approximately $563.4 million after underwriting discounts, commissions and offering expenses
- Use of proceeds: general corporate purposes, including the acquisition of bitcoin and working capital
- Settlement scheduled for February 5, 2025, subject to customary closing conditions
- Preferred stock has a $100 per share liquidation preference and 8.00% fixed cumulative dividends, payable in cash, Class A common stock, or a combination at the company's election
- Initial conversion rate of 0.1000 Class A common shares per preferred share, equal to an initial conversion price of $1,000.00 per common share
- Offering made under an effective Form S-3ASR shelf registration (Registration No. 333-284510) with Barclays Capital Inc. as manager and representative of the underwriters
03—Questions
Frequently Asked Questions
How much capital is MicroStrategy raising in this offering?
The company estimates net proceeds of approximately $563.4 million from the sale of 7,300,000 shares at $80.00 per share, after underwriting discounts, commissions and estimated offering expenses.
What will the proceeds be used for?
The company intends to use the net proceeds for general corporate purposes, including the acquisition of bitcoin and for working capital.
What are the key economic terms of the preferred stock?
The preferred stock has a $100 per share liquidation preference and accumulates cumulative dividends at a fixed rate of 8.00% per annum. Regular dividends are payable when, as and if declared, quarterly on March 31, June 30, September 30 and December 31, beginning March 31, 2025, in cash, Class A common stock or a combination, at the company's election.
Under what circumstances can the company redeem the preferred stock or can holders require repurchase?
The company may redeem all, but not less than all, of the preferred stock for cash at any time if the outstanding aggregate liquidation preference is less than 25% of the amount issued in the offering, or if certain tax events occur. If a fundamental change occurs, holders may require repurchase at the liquidation preference plus accumulated and unpaid regular dividends, subject to a limited exception.
How can holders convert the preferred stock into common stock?
Holders may convert their preferred shares on any business day, subject to certain limitations, into Class A common stock at an initial conversion rate of 0.1000 shares per preferred share, which equals an initial conversion price of $1,000.00 per common share. The conversion rate and price are subject to adjustment upon certain events.
04—Continue