Terms of the First Convertible Note Offering by MicroStrategy | LibreCharts

Terms of the First Convertible Note Offering by MicroStrategy

The official press release from MS can be found here: https://www.microstrategy.com/en/investor-relations/press/microstrategy-completes-1-05b-offering-of-convertible-senior-notes_02-19-2021

We're going to extract the relevant details below for the sake of brevity.

1. Date = Feb. 19th, 2021

2. Maturity Date = February 15th, 2027

3. Sold via Rule144A (SEC exemption for securities offering)

4. Notes are "unsecured, senior obligations" (senior convertible notes)

5. MicroStrategy has a redemption option for the notes (starting Feb. 20th, 2024; for cash) if, and only if the price has appreciated by >=130% of conversion price (according to last reported price)

6. Shares are convertible into cash, shares of MicroStrategy's class A common stock, or a combination of cash and shares of MicroStrategy's class A common stock...

7. (important) - "The conversion rate for the notes is initially 0.6981 shares of MicroStrategy’s class A common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $1,432.46 per share."

8. (important again) - "This represents a premium of approximately 50% over the last reported sale price of $955.00 per share of MicroStrategy’s class A common stock on The Nasdaq Global Select Market on February 16, 2021."

We'll unpack this in the next section.