Strategy repurchases $1.5B of 2029 convertible notes

Strategy, the company formerly known as MicroStrategy, repurchased about $1.38 billion of its 0% convertible senior notes due 2029 on Tuesday, lowering outstanding converts tied to those notes from $8.2 billion to $6.7 billion. The company said the transaction trims future repayment and refinancing obligations.

The company bought the notes at roughly an 8% discount to par and used existing cash reserves to fund the purchase. The repurchase covered approximately $1.5 billion of convertible debt on the company’s books. Strategy reported it held about $871 million in cash after completing the transaction.

Shares initially rose about 4.4% after the announcement before most gains evaporated when Bitcoin prices slipped below $76,000. The company paused additional Bitcoin purchases after spending $2.01 billion to acquire 24,869 BTC between May 11 and May 17 at an average price of $80,985 per coin.

Strategy now holds 843,738 Bitcoin with an average cost basis near $75,700 per coin. The company reported a $14.5 billion unrealized loss on its crypto holdings in the previous quarter. Bitcoin’s price has fallen sharply from a peak above $126,000 reached last October, and Strategy’s shares have declined roughly 56% over the past year.

In a statement, Chief Financial Officer Andrew Kang called the repurchase ‘both equity and credit positive for our investors’ and said the company plans to gradually rebuild cash reserves while managing its capital structure and maintaining cash to support the credit quality of its Digital Credit securities.

Analysts noted the debt reduction lowers near-term cash repayment strain. Benchmark Equity Research analyst Mark Palmer wrote that Strategy appears to be funding future Bitcoin accumulation more through perpetual preferred stock than convertible debt, since preferred instruments have no maturity date. Strategy disclosed about $15.5 billion in aggregate notional value tied to outstanding preferred stock instruments. André Dragosch, head of research for Europe at Bitwise, characterized the buyback as removing ‘a major uncertainty around the cash repayment wall in mid-2028.’

Critics have said that heavy exposure to a volatile asset could complicate meeting debt obligations if prices remain under pressure. The repurchase reduces outstanding convertible obligations and the need to refinance those maturing securities while leaving the company with smaller cash reserves to support operations and any future purchases.