Strategy buys $1.5B of 2029 notes at 8% discount

Strategy repurchased $1.5 billion of its 0% convertible senior notes due 2029 for $1.38 billion on Tuesday, buying the debt at an 8% discount and reducing the outstanding principal for 2029 from $8.2 billion to $6.7 billion. The company reported the repurchase was funded from cash reserves.

By paying $1.38 billion for $1.5 billion in face value, Strategy removed $1.5 billion from its convertible-note liabilities tied to the 2029 maturity. The notes carry no cash interest and convert into shares at a conversion price near $672 per share.

In its disclosure Strategy reported an aggregate notional amount of $15.5 billion in outstanding preferred stock and a U.S. dollar cash reserve of $871 million. The filing did not include plans for further debt transactions or new share issuances.

The company did not report any bitcoin purchases for the current week. Between May 11 and May 17 it acquired 24,869 bitcoin for $2.01 billion at an average price of $80,985 per coin.

André Dragosch, head of European research at Bitwise, wrote the buyback was a “Great move by Strategy,” and added the debt reduction removes a “major uncertainty around the cash repayment wall in mid-2028.” He cited the relatively high conversion price.

Shares of Strategy slipped about 3% in pre-market trading on Tuesday, trading just above $159 at the time of the update. The stock has fallen about 10% over the past month and roughly 59% over the past year. Bitcoin’s price declined about 1.2% in the past month and roughly 29% over the past year.

Financial details on the timing of the repurchase were limited. Strategy reported it financed the transaction from existing cash rather than issuing new debt or equity.