Strategy has announced the pricing of its $2.0 billion convertible senior notes. The largest bitcoin treasury firm is selling these notes in a private offering to large institutional investors under Rule 144A of the Securities Act.
The offering is scheduled to close tomorrow if all conditions are met. The company has also granted buyers the option to purchase an additional $300 million of the notes within five business days of issuance.
According to the announcement, these notes are unsecured, meaning they are not backed by any asset. They will not pay interest and their value will remain the same over time. The notes mature on March 1, 2030, unless converted, repurchased or redeemed earlier.
In addition, investors may convert their notes only before December 3, 2029, if certain conditions are met. They may convert them at any time after that date, up until the second trading day before maturity.
The company confirmed that it will pay out 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, meaning the conversion price is $433.43 per share.
This is a 35% premium to Strategy’s stock price of $321.05 on February 19. The conversion rate and price may change if certain events occur.
The company has the right to repurchase the notes for cash as of March 5, 2027, but only if the stock price rises 130% above the conversion price for a specified period. If a “fundamental change” occurs, noteholders can ask Strategy to repurchase their notes for cash. Investors also have the option to sell their notes back to Strategy on March 1, 2028.
Strategy estimates it will raise $1.99 billion, or $2.28 billion if buyers exercise the additional option. “We intend to use the proceeds for general corporate purposes, including the acquisition of bitcoin and working capital,” the company said.
Because the notes were sold pursuant to Rule 144A, they are not registered under U.S. securities laws. They can only be sold under certain legal exemptions.