Strategy (MSTR.US) issues $2 billion convertible bonds, zero interest leverage to increase bet on the cryptocurrency bull market.

Under the leadership of Michael Saylor, Strategy (MSTR.US) company announced a plan to issue $2 billion in convertible bonds through private placement, continuing its non-traditional financing strategy as a self-proclaimed Bitcoin fund company. According to a statement released on Tuesday, the company (formerly known as MicroStrategy Inc.) plans to issue senior notes due in 2030 with a 0% coupon rate. The proceeds from this issuance will be used for purposes such as purchasing more Bitcoin, in line with its recent actions. It is worth noting that in the past 14 weeks, the company has announced Bitcoin purchases for 12 weeks, but did not raise cash through selling stocks or debt in the previous week to purchase Bitcoin. Sources revealed that the conversion premium for these bonds is set between 40% to 50%, and includes a three-year put option that allows bondholders to redeem the bonds at a specific time before maturity. Representatives from Strategy did not immediately respond to requests for comment. In terms of personnel adjustments, Strategy stated in last year's annual report that the company had cut approximately 20% of its workforce, or 400 positions, reducing the total number of employees to 1,534. Nonetheless, the company's stock price has still achieved over 700% growth in the past three years, despite a 30% decline from its record high in November. As of February 17, Strategy held 478,740 Bitcoins, representing over 2.5% of all tokens, valued at over $45 billion. This convertible bond issuance is the first direct issuance since Strategy raised over $560 million through a significant discount. The company plans to raise $42 billion by 2027 through market stock sales and fixed income securities to provide funds for Bitcoin purchases, nearly reaching half of this goal at present. Hedge funds have shown partial demand for publicly issued convertible bonds as they seek to combine buying bonds with shorting stocks in a trading strategy essentially betting on the volatility of underlying stocks. Strategy is expected to offer initial buyers the option to purchase an additional $300 million in bonds of high value, and will host a live webinar on Wednesday at 10 a.m. New York time. Strategy, an enterprise software company based in Tyson's Corner, Virginia, has transformed in recent years into a leveraged Bitcoin proxy. Co-founder and chairman Michael Saylor has increased the issuance and purchase of Bitcoin since Donald Trump was elected president. He stated, "We will continue to pursue intelligent leverage for Bitcoin's largest investors through convertible bond strategies, preferred stock strategies, and opportunistic capital market strategies to create leverage and performance." Strategy reported a net loss of $670.8 million in the fourth quarter, after recording a $1 billion Bitcoin impairment charge. However, under new accounting standards, the company expects to turn a profit this quarter, with the fair value change of its Bitcoin holdings reflected in the income statement. This shift may provide investors with more transparency about the company's financial condition.