Strategy has announced the pricing of its $2.0 billion convertible senior notes. The largest bitcoin treasury company is selling these notes in a private offering to big institutional investors under Rule 144A of the Securities Act.
The offering is set to close tomorrow if all conditions are met. The firm has also granted buyers an option to purchase $300 million more in notes within five business days after issuance.
According to the announcement, these notes are unsecured, meaning they are not backed by any assets. They will not pay interest, and their value will stay the same over time. The notes will mature on March 1, 2030, unless they are converted, repurchased, or redeemed earlier.
Also, investors can only convert their notes before December 3, 2029, if certain conditions are met. After this date, they can convert at any time until the second trading day before maturity.
The company confirmed that it will pay in cash, stock, or a mix of both when the notes are converted. The initial conversion rate is 2.3072 shares per $1,000 principal amount, which means the conversion price is $433.43 per share.
This is 35% higher than Strategy’s $321.05 stock price on February 19. The conversion rate and price may change if certain events occur.
The company has the right to redeem the notes for cash starting March 5, 2027, but only if its stock price goes 130% above the conversion price for a certain period. If a “fundamental change” happens, noteholders can ask Strategy to buy back their notes for cash. Investors also have the option to sell back their notes to Strategy on March 1, 2028.
Strategy estimates it will raise $1.99 billion or $2.28 billion if buyers take the extra option. The company said, “We intend to use the proceeds for general corporate purposes, including the acquisition of bitcoin and for working capital.”
Since the notes were sold under Rule 144A, they are not registered under U.S. securities laws. They can only be sold under specific legal exemptions.