Business intelligence firm MicroStrategy has made headlines yet again with its recent announcement that it has repaid its Silvergate loan of $205 million at a 22% discount. The company’s co-founder and former CEO, Michael Saylor, confirmed the news on Twitter, citing a form 8-K filing with the U.S. Securities and Exchange Commission.
Loan Details and Prepayment Offer
MicroStrategy received the loan under the Silvergate Exchange Network Leverage program in March 2022, with collateral consisting of certain bitcoin that MicroStrategy owned. The loan had a scheduled maturity date of March 23, 2025, and the credit agreement stipulated that MicroStrategy had to maintain a loan-to-collateral value ratio of less than 50%.
In a voluntary prepayment agreement with Silvergate, MicroStrategy offered to repay the loan at approximately $161 million, effectively terminating the credit agreement and releasing Silvergate’s security interest in all MicroStrategy assets serving as collateral, including the bitcoin.
Bitcoin Purchase and Total Holdings
In addition to repaying the loan, MicroStrategy also announced that it purchased 6,455 BTC for $150 million. This latest purchase, made between February 16 and March 23, brings MicroStrategy’s total holdings to 138,955 BTC. Saylor revealed on Twitter that the company bought the BTC for $4.1 billion at an average of $29,817 per coin.
According to MicroStrategy’s latest filing, the company’s unrealized loss significantly shrank, worth over $1 billion until recently, due to the latest surge in bitcoin prices.
Agreement to Sell Class A Common Stock
MicroStrategy also announced that it had agreed with two companies, Cowen and Company, and BTIG, to sell its aggregated class A common stock worth $500 million. Under the agreement, the company issued and made an aggregate of 1,348,855 shares, amounting to roughly $339 million.
First Transaction of 2023
With MicroStrategy’s latest acquisition, the company has made its first transaction of 2023. As one of the major bitcoin investors in the business world, the company’s actions are closely monitored by industry insiders and enthusiasts alike.
The recent repayment of its Silvergate loan and BTC purchase may signal MicroStrategy’s continued confidence in bitcoin’s future as a store of value and hedge against inflation. While the cryptocurrency market remains volatile, MicroStrategy’s bold moves demonstrate the company’s commitment to its bitcoin investment strategy.
