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Bitcoin Treasury Firm Strategy To Repurchase $1.5B Of Convertible Notes — Details

Bitcoin treasury company Strategy (formerly MicroStrategy) has disclosed its intention to repurchase $1.5 billion of its 2029 convertible debt notes. This move comes amid commentary on the shift in the Michael Saylor-led firm’s “Never Sell” perspective, intensifying focus on the company’s market actions in the coming weeks.

Will Strategy Sell Bitcoin To Repurchase Its Debt?

In a May 15th post on the social media platform X, Strategy’s chairman, Michael Saylor, confirmed that the firm has filed to repurchase $1.5 billion principal amount of its convertible senior notes due in 2029. This decision comes as part of the outcome of privately negotiated transactions with holders of this debt security.

In the Form 8-K filed with the United States Securities and Exchange Commission (SEC) on May 14th, Strategy disclosed that it agreed to retire approximately $1.50 billion in aggregate principal amount of the 2029 Notes for an estimated aggregate cash repurchase price of approximately $1.38 billion.

Bitcoin

The official filing read:

The final aggregate cash repurchase price for the Repurchased Notes is subject to adjustment, and will be based in part on the daily volume-weighted average price per share of Strategy’s class A common stock, par value $0.001 per share (the “Class A Common Stock”), during an agreed upon measurement period (the “Measurement Period”).

The Bitcoin treasury firm also revealed that these repurchase transactions will be funded with available cash reserves, proceeds from sales of securities under its at-the-market offering program, and/or proceeds from the sale of Bitcoin. Quite interestingly, this filing comes barely a week after the company’s CEO, Phong Le, highlighted scenarios in which the firm might shed some of its Bitcoin holdings.

According to the executive, this included situations that would increase shareholder value, such as dividend payments. It remains to be seen whether the firm debt repurchase falls into the category of activities that warrants the sale of a portion of its Bitcoin.

Merely looking at the action, retiring these convertible notes could be positive for equity investors, as it means that the hybrid debt instrument holders won’t be able to convert to common stock (and potentially dilute the shareholders). Instead, the repurchase gives Strategy a perfect opportunity to reorganize its balance sheet and capital structure.

Strategy’s STRC Registers Record High Daily Trading Volume

Interestingly, the news of this debt repurchase comes merely a day after STRC, Strategy’s Variable Rate Series A Perpetual Stretch Preferred Stock, posted its highest daily trading volume of $1.53 billion on Thursday, May 14th. This represents a significant jump from the previous record of $1.1 bill reached on April 13.

This trading explosion in STRC, which has been Strategy’s capital-raising instrument for purchasing Bitcoin, could help the firm raise about $735 million to buy BTC. As of this writing, the firm maintains its position as the largest corporate Bitcoin holder, with a stash of 818,869 Bitcoin, worth about $66 billion.

Bitcoin

 



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