Dan Hillary

Dan Hillary from Buck Global LLC asked about the de-equitization of convertible notes as a headwind for preferred equity cost of capital and the timing for Strategy to consider refinancing or retiring converts at a discount if MSTR trades below the conversion price.

Answer

CEO Phong Le stated that convertible notes are not a significant overhang, recalling that even when converts traded at $0.35 on the dollar during the 2022 Bitcoin winter, buying them back didn't make sense given the expectation of Bitcoin price appreciation. Executive Chairman Michael Saylor added that the company would typically evaluate refinancing or mitigating risks about a year before a put or redemption event, aiming to act with a few quarters' buffer, but currently, they are outside that window.

Dan Hillary inquired about the de-equitization of convertible notes as a headwind for preferred equity cost of capital and asked how many months before the put date Strategy would consider refinancing or retiring converts at a discount if MSTR trades below the conversion price.

Answer

CEO Phong Le stated that convertible notes are not a significant overhang, noting that Bitcoin would need to drop to $8,000 and remain there for five to six years to pose a problem. Executive Chairman Michael Saylor added that the company would typically evaluate refinancing, hedging, or mitigating risks about a year before a put or redemption event, aiming to act with a few quarters' buffer at the latest, but currently, they are outside that window.