Third Strategy Introduces Preferred Stock Option for Bitcoin Acquisitions
MicroStrategy Announces Issuance of Preferred Shares to Support Bitcoin Purchases
MicroStrategy Inc., the largest corporate holder of Bitcoin, has announced its plans to issue a new preferred stock called "STRIDE" (ticker: STRD). The company aims to raise approximately $250 million through this issuance to buy more Bitcoin.
The new preferred stock will pay a 10% annual dividend and will be junior to STRK and STRF in the capital structure. Unlike STRK or STRF, STRD does not have a claim that deferred dividends will be paid later.
According to the company, the issuance of STRD will be priced at $100 per share, with an initial offering of 2.5 million shares. MicroStrategy plans to introduce more STRD shares through an "at-the-market offering (ATM)" to further bolster its Bitcoin holdings.
The institution's filing with the U.S. Securities and Exchange Commission (SEC) reveals that it has also sought approval to sell more shares in the market for STRK and STRF, up to $21 billion for STRK and up to $2.1 billion for STRF.
MicroStrategy's mNAV (calculated as (Market capitalization - Debt) / Value of held Bitcoin) is currently slightly below 2. If the company faces difficulties raising equity capital due to a low mNAV while simultaneously increasing debt, it could lead to selling bitcoins and potential closure.
However, MicroStrategy expects to have a three-digit million amount available in the coming days to buy Bitcoin. The company plans to intelligently coordinate the issuance of common and preferred shares to bring leverage to an appropriate level.
The pricing of STRD is expected to take place on June 5, 2025. Investors can express interest in STRD through Fidelity. It's important to note that the funds raised from the issuance of STRD will be used solely for Bitcoin purchases.
The recent issuance of at least 2.5 million preferred shares under the designation "STRIDE" is part of MicroStrategy's perpetual preferred stock series, aimed at supporting Bitcoin purchases. If market interest rates fall and/or investors demand a lower risk premium on MicroStrategy's preferred shares, this will be reflected in rising STRK, STRF, and STRD prices.
As of now, MicroStrategy holds 580,955 BTC, valued at over $60 billion. The company has been using various capital-raising methods to increase its Bitcoin holdings, reflecting its commitment to Bitcoin as a strategic asset.
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