MicroStrategy wants to raise $400 million via debt and buy more bitcoin with it

Bitcoin • June 7, 2021, 8:51AM EDT
UPDATED: June 7, 2021, 10:43AM EDT
The Block

Nasdaq-listed MicroStrategy said Monday that it plans to raise $400 million via senior secured notes — a type of debt offering — and use the net proceeds of that offering to buy more bitcoin.

MicroStrategy today also announced two new entities — MicroStrategy Services Corporation and MacroStrategy LLC.

MicroStrategy Services Corporation will guarantee the new notes if issued and secure them with the bitcoin that it would acquire.

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"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," said MicroStrategy.

As for backing, the notes will be secured with MicroStrategy’s existing assets, including any bitcoin to be acquired from the proceeds of the notes, but excluding MicroStrategy’s existing bitcoin, said the company. 

MicroStrategy’s existing 92,079 bitcoin (worth about $3.4 billion), on the other hand, will be held by a new entity called MacroStrategy LLC.

In separate news, MicroStrategy today also announced that it expects to incur an impairment loss of at least $284.5 million related to its bitcoin holdings for the three months ending June 30, 2021. Bitcoin's price has declined by around 45% in recent weeks, from around $64,000 in mid-April to nearly $36,500 currently.

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