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MicroStrategy Settles $205 Million Debt with Silvergate & Shores Up on Bitcoin 

MicroStrategy Incorporated (NASDAQ: MSTR) recently increased its Bitcoin (BTC) holdings following a recent Silvergate Bank (NYSE: SI) loan repayment. According to reports, the BTC-loving business intelligence firm has bought an additional 6,455 Bitcoin for $150 million. The purchase, which also translates to an average price of $23,238 per token, brings MicroStrategy’s total Bitcoin holdings to 138,955 BTC. The company’s Bitcoin cache has an overall value of $4.1 billion at an average of $29,817 per token.

MicroStrategy’s latest Bitcoin purchase comes amid the ongoing recovery of the digital currency market. The company’s shares were up 0.9% in premarket trading today, March 27th.

Today, the mobile software and cloud-based services platform’s co-founder Michael Saylor announced that Microstrategy repaid its $205 million Silvergate loan. According to Saylor, a former MicroStrategy CEO, the company repaid the sizable loan to the failed bank at a 22% discount. By paying off the 2-year loan Silvergate loan, MicroStrategy also freed up 34,619 Bitcoin previously held as collateral. A regulatory filing with the US Securities and Exchange Commission (SEC) read:

“On March 24th, 2023, MacroStrategy and Silvergate entered into a Prepayment, Waiver, and Payoff to Credit and Security Agreement, under which MacroStrategy voluntarily prepaid Silvergate roughly $161.0 million (the “Payoff Amount”), in full repayment, satisfaction, and discharge of the loan and all other obligations under the Credit Agreement.”

The document further stated:

“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.”

The Silvergate loan was scheduled to mature in two years and bore interest equaling the SOFR 30-day average plus 3.70%. Three days ago, the floating rate equaled 8.27%.

MicroStrategy also generated more than $300 million amid its loan repayment, from the sale of its shares. According to the company, the sales took place between January 1st and March 24th this year. The MicroStrategy regulatory filing addressed the shares’ development, saying that”MicroStrategy had issued and sold an aggregate of 1,348,855 Shares under the Sales Agreement for aggregate net proceeds to MicroStrategy (fewer sales commissions and expenses) of approximately $339.4 million.”

The Virginia-based business intelligence company revealed that the proceeds from the share sales program fully funded the loan payoff. In addition, MicroStrategy said it offset the loan using $5 million in the MacroStrategy cash reserve account at Silvergate.

In early March, MicroStrategy denied having any assets custodied with Silvergate Bank. At the time, the company pointed out that there was no urgency in repaying the loan due to the far-off deadline. Citing the 2025 due date, MicroStrategy emphasized the loan terms would stay the same even in the face of possible insolvency.

Nonetheless, MicroStrategy also admitted at the time that it could attract more regulatory scrutiny due to Silvergate’s then precarious position.

MicroStrategy Settles $205 Million Debt with Silvergate & Shores Up on Bitcoin 

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