Voluntary Prepayment of Silvergate Loan
As previously disclosed, on March 23, 2022, MacroStrategy LLC (“MacroStrategy”), a wholly-owned subsidiary of MicroStrategy Incorporated (the “Company” or “MicroStrategy”), entered into a Credit and Security Agreement (the “Credit Agreement”) with Silvergate Bank (“Silvergate”) pursuant to which Silvergate issued a $205.0 million term loan (the “Loan”) to MacroStrategy. The Loan had a scheduled maturity date of March 23, 2025, and bore interest at a floating rate equal to the SOFR 30 Day Average as published by the Federal Reserve Bank of New York’s website plus 3.70%, with a floor of 3.75%. As of March 24, 2023, the floating rate equaled 8.27%. The Loan was collateralized by certain bitcoin owned by MacroStrategy and a $5.0 million cash reserve account held by MacroStrategy at Silvergate. Under the terms of the Credit Agreement, MacroStrategy was required to maintain a Loan to collateral value ratio of less than 50%. As of March 24, 2023, approximately 34,619 bitcoins were held in a collateral account established under the Loan. Additional material terms of the Credit Agreement are described in the Company’s Form 8-K filed with the Securities and Exchange Commission on March 29, 2022.
On March 24, 2023, MacroStrategy and Silvergate entered into a Prepayment, Waiver and Payoff to Credit and Security Agreement, pursuant to which MacroStrategy voluntarily prepaid Silvergate approximately $161.0 million (the “Payoff Amount”), in full repayment, satisfaction, and discharge of the Loan and all other obligations under the Credit Agreement. Upon Silvergate’s receipt of the Payoff Amount, the Credit Agreement was terminated, and Silvergate released its security interest in all of MacroStrategy’s assets collateralizing the Loan, including the bitcoin that was serving as collateral.
Bitcoin Activity
On March 27, 2023, MicroStrategy announced that, during the period between February 16, 2023 and March 23, 2023, MicroStrategy, together with its subsidiaries, acquired approximately 6,455 bitcoins for approximately $150.0 million in cash, at an average price of approximately $23,238 per bitcoin, inclusive of fees and expenses. As of March 23, 2023, MicroStrategy, together with its subsidiaries, held an aggregate of approximately 138,955 bitcoins, which were acquired at an aggregate purchase price of approximately $4.14 billion and an average purchase price of approximately $29,817 per bitcoin, inclusive of fees and expenses.
ATM Activity
As previously disclosed, on September 9, 2022, MicroStrategy entered into a Sales Agreement (the “Sales Agreement”) with Cowen and Company, LLC and BTIG, LLC, as sales agents (the “Agents”), pursuant to which MicroStrategy may issue and sell shares of its class A common stock, par value $0.001 per share (“Shares”), having an aggregate offering price of up to $500.0 million from time to time through the Agents. On March 27, 2023, MicroStrategy also announced that during the period between January 1, 2023 and March 24, 2023, MicroStrategy had issued and sold an aggregate of 1,348,855 Shares under the Sales Agreement for aggregate net proceeds to MicroStrategy (less sales commissions and expenses) of approximately $339.4 million. MacroStrategy’s prepayment of the Silvergate loan as described above was fully funded using proceeds from the sale of Shares under the Sales Agreement and the $5.0 million in the cash reserve account held by MacroStrategy at Silvergate.