U.Today – MicroStrategy (MSTR), the big-bet business intelligence firm, is set to redeem its 2027 convertible notes. In an update shared by CEO Michael Saylor, the aggregate principal amount of the notes to redeem the totals of about $1.05 billion.
Microstrategy's Move to Redeem Funded Bitcoin Accumulation
MicroStrategy issued these notes to raise funds for its aggressive bitcoin accumulation. As of January 21, 2025, MicroStrategy's cumulative Bitcoin holdings stand at a staggering 461,000 BTC. This sum is valued at approximately $48.86 billion at the current market price.
Microstrategy's announcement means the company has decided to redeem the notes or pay off the $1.05 billion debt before it matures.
However, this deal will come in the form of requests to convert the notes into MSTR shares. Generally, convertible notes are a debt instrument that allows bondholders to convert their holdings into shares of the issuing company. This is at a predetermined price.
According to the bondholders' notice, all outstanding notes must be redeemed by February 24, 2025. The redemption price is equal to 100% of the principal amount, plus accrued and unpaid special interest.
Microstrategy says the notes are convertible at the applicable conversion rate of $142.38 per share.
Strategic implications and market reactions
This development has triggered a reaction from the broader cryptocurrency market regarding its likely impact on MSTR and BTC.
Mainly, analysts say the decision to settle bondholders in shares and not cash is strategic. It helps Microstrategy avoid using much-needed funds that can be useful in additional bitcoin purchases.
However, some have expressed concern that this could dilute MSTR's shares. The current value of MSTR shares could decrease, affecting the shares of existing shareholders.
Over the years, Microstrategy has leaned heavily on Bitcoin for much of its corporate strategy and has benefited massively from it. This development could indicate that the company is doubling down on its holdings. Therefore, investors in MSTR will have to monitor how much impact the move will have on the share price.
This article was originally published on U.Today
