Strategy (MSTR) Unveils New Funding Initiative for Bitcoin Purchases
On Tuesday morning, Strategy (MSTR) revealed an innovative approach to raising capital from the financial markets aimed at enhancing its Bitcoin (BTC) acquisitions. However, there are emerging signs that the flow of funds from Wall Street may be tightening.
The company has introduced the Perpetual Strife Preferred Stock (STRF), which features a fixed annual cash dividend of 10%, payable quarterly, as detailed in a recent SEC filing. In the event that dividends are not paid, they will accrue at an additional 1% per year (calculated quarterly), capping at a maximum of 18%. The inaugural dividend payment is slated for June 30, 2025.
Previously, Strategy’s initial preferred series (STRK) offered a comparatively lower interest rate of 8%. Additionally, the company’s series of convertible debt offerings were structured with minimal or even 0% interest rates, distinguishing them from preferred stock offerings.
It is important to note that unlike common stock, STRF holders are not granted voting rights. However, they do enjoy a priority status in the event of liquidation, with a specified $100 per share liquidation preference. The company retains the right to redeem STRF shares if less than 25% of the original shares are outstanding, or in the occurrence of specific tax events. Conversely, shareholders can request a buyback in the event of a fundamental change within the company.
STRF is anticipated to begin trading on Nasdaq within a month of its issuance, presenting investors with an opportunity for high-yield exposure to Bitcoin. The offering is being managed by a consortium of financial giants including Morgan Stanley, Barclays, Citigroup, and Moelis & Company, all serving as joint book-running managers under an SEC shelf registration.
Despite a vigorous pace of Bitcoin acquisitions over the past several months, Strategy’s fundraising efforts and token purchases have notably decelerated in recent weeks. Last week, the company did make some additional Bitcoin purchases, acquiring just 130 BTC for $10.7 million, which brought its total holdings to 499,226 BTC tokens.
In early trading on Tuesday, MSTR shares were down by 5%, reflecting a broader market decline coinciding with Bitcoin’s recent drop to $81,300, down from $84,000 just a day prior.
