- Metaplanet executed a $130 million loan using Bitcoin as collateral.
- The company plans to use the proceeds of the loan to acquire more BTC.
- The business maintains a balance of 30,323 BTC, ranking it fourth among publicly traded DAT entities.
Japanese publicly traded firm Metaplanet disclosed on Tuesday that it recently secured a $130 million loan. The company’s $500 million credit facility backed the loan collateralized in Bitcoin (BTC), bringing the platform’s utilization to $230 million after the business borrowed another $100 million in early November.
Terms of the $130M Loan Backed by Bitcoin
The company didn’t disclose the lender’s name upon request for anonymity. Nonetheless, it revealed that the parties executed the loan last Friday under an unspecified US dollar interest rate plus a spread.
Additionally, the loan is automatically renewed on a daily basis and is repayable at any time at the company’s discretion.
Metaplanet’s Use of Bitcoin as Collateral
Metaplanet explained that when borrowing against Bitcoin collateral, a decline in BTC’s price during the loan’s pendency may require the borrower to pledge more of the asset to the lender. However, it ensured investors that it has enough headroom to collateralize its loan even during severe market volatility, given its extensive Bitcoin holdings.
To date, the Japanese firm holds 30,323 BTC, ranking it fourth among publicly known Bitcoin treasury companies worldwide. It’s only behind XXI’s 43,514 BTC haul and slightly ahead of Bitcoin Standard Treasury Company’s 30,021 stash. Strategy (formerly MicroStrategy) leads this group, with a portfolio of 649,870 BTC.
Meanwhile, Metaplanet stated that it cannot exceed the collateral buffer of its half-a-billion-dollar credit facility, highlighting the calculated risk it employs in using its BTC reserves as a loan guarantee.
Use of the Loan
Metaplanet said it will utilize the proceeds of the loan to boost its Digital Asset Treasury (DAT) strategy. A large chunk of the funds will be for the acquisition of more BTC.
Moreover, the company plans to expand its Bitcoin income-generation business. The funds allocated to its BTC income-generation business will be allotted as collateral for selling Bitcoin options to earn premium income.
Furthermore, Metaplanet plans to use the proceeds to finance share repurchases under favorable market conditions.
Metaplanet assured shareholders that the possible impact of the loan on its financial results at the year-end report in December will be minimal. Nevertheless, the firm guaranteed that it would immediately disclose any “material impact” arising from its recent decision.
