MicroStrategy confirmed yesterday that it has plans of raising $400 million using a debt offering so that it could buy more Bitcoin. The company already owns 92,079 BTC. It was confirmed that two new entities will be created, MicroStrategy LLC (which will hold the current amount of Bitcoin) and Micro Strategy Services Corporation.
The announcement also mentions that the offering is subject to market conditions and it doesn’t make any assurance if or when the terms of the offering may be completed. The notes sold will be “fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by MicroStrategy Services Corporation.”
It is mentioned that the notes will only be available for qualified institutional buyers “in reliance on Rule 114A under the Securities Act of 1933,” which also includes non-US citizens, as long as they follow Regulation S of the same Act.
The notes will rely on the existing assets of the company to remain secure, which includes the current stash of BTC.
Since the year began, MicroStrategy made six major BTC buys, with the most recent being on May 18th, when it acquired 229 BTC for $10 million. The total BTC owned now is worth $3.4 billion. 20,857 BTC were bought during Q1 at the average price of $52,087 per Bitcoin.
Michael Saylor, the CEO of MicroStrategy, declared that the company “will continue to acquire and hold additional bitcoin, as we seek to create additional value for shareholder.”
Still, some people are growing suspicious of this activity, such as Marc Lichtenfeld, the chief income strategist at the Oxford Club, who commented that this has become simply a proxy for acquiring Bitcoin using the money of other people. He even tweeted: “think about this for a minute. $MSTR is not borrowing $400M to grow its business. It is borrowing to gamble on a volatile asset. Would it be OK if it was borrowing the money to buy $AMC? gold? Baseball cards?”