MicroStrategy Announces $400 Million Note Financing, $284.5 Million Bitcoin Impairment Charge

MicroStrategy (NASDAQ: MSTR) this morning announced that it intends to raise US$400 million via the issuance of senior secured notes due 2028 to buy bitcoin. This is despite the firm this morning noting in an 8-K that it filed with the SEC that the firm would be facing significant writedowns as a result of the fluctuations in the price of the cryptocurrency.

The senior secured notes are expected to be offered in a private offering to institutional buyers. The notes are to be fully secured by MicroStrategy Services Corp, a subsidiary of the company. Notably, the company evidently is looking to protect its current holdings, with the debt to be secured by future assets of MicroStrategy, but not its existing bitcoins or bitcoins and digital assets purchased from the proceeds of existing bitcoins.

In short: the company is looking to compartmentalize its debt risk. The firm reportedly holds 92,079 bitcoins as of today, which are to be held in a new subsidiary, entitled MacroStrategy LLC.

Proceeds from the placement are to be used to acquire additional bitcoins.

This is notable, given that the company this morning also indicated that it intends to take significant impairment charges for the quarter ended June 30, 2021, with an estimated charge of $284.5 million. The charge is directly related to the decline in the value of the firms bitcoin holdings over the three month period. The loss follows a $194.1 million impairment taken during the first quarter related to bitcoin holdings.

For the three months ended March 31, the company reported digital holdings valued at $1.95 billion, which was funded by $1.66 billion in secured notes.

MicroStrategy last traded at $477.32 on the Nasdaq.


Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

2026 Could Be Gold’s Biggest Year Yet!? | Ryan King – Equinox Gold

Gold Is Screaming Higher While Currencies Burn | Simon Ridgway – Rackla Metals

We Have the Highest-Grade Antimony Deposit in North America!? | Jim Atkinson -Antimony Resources

Recommended

Canadian Copper Secures $8 Million Lead Order From Ocean Partners As Part Of Larger Funding Round

Northern Superior Expands Philibert With 350 Metre Step Out Testing 1.10 g/t Gold Over 25.5 Metres

Related News

Bitcoins Tumble Forces Bitfarms To Sell BTC To Meet Collateral Requirements

At least one cryptocurrency miner is feeling the impact of falling market sentiment, and as...

Friday, June 17, 2022, 03:31:00 PM

Microsoft Votes No on Bitcoin Despite Saylor’s Plea

Microsoft Corporation (NASDAQ: MSFT) has officially decided to steer clear of Bitcoin as part of...

Wednesday, December 11, 2024, 12:55:00 PM

Musk’s Bitcoin Electricity Comments Could Push Investment To Coins Like XRP, Dogecoin, Cardano

Elon Musk’s May 13 tweet that Tesla will no longer accept Bitcoin as payment for...

Wednesday, May 19, 2021, 02:22:00 PM

MicroStrategy Records A Whopping US$1.06 Billion Net Loss In Q2 2022 Due To ‘Crypto Winter’

MicroStrategy (Nasdaq: MSTR) just felt the brunt of the crashing bitcoin prices on the firm’s...

Wednesday, August 3, 2022, 09:46:30 AM

US Treasury Proposes Stricter Cryptocurrency Compliance with IRS

In an effort to deliver on its promise to intervene in the cryptocurrency market, US...

Monday, May 24, 2021, 11:19:00 AM