The bitcoin holding firm Strategy plans to offer 5 million shares of preferred stock with no end date, what it calls a "Series A Perpetual Strife Preferred Stock (STRF)," according to a Tuesday company release.
Strategy would use proceeds from the offering to buy more bitcoin — thus adding to the firm's nearly 500,000 BTC holdings — and working capital, the company said in the statement.
A quarterly cash dividend would be paid at a fixed 10% annual rate. Any unpaid dividends would roll over and accrue additional “compounded dividends” at an increasing interest rate. Initially set at an annual rate of 11% for unpaid dividends, the compounded rate increases by 100 basis points each quarter should those dividends remain unpaid, though it has a total 18% cap.
The liquidation preference for STRF shares will be first set at $100, though that can change after the offering, Strategy said.
Strategy tapped major finance institutions, including Morgan Stanley, Barclays Capital, Citigroup Global Markets and Moelis & Company, as joint book-running managers for the possible STRF offering.
Strategy's potential STRF offering comes one day after it purchased 130 BTC for $10.7 million, bringing the firm's total bitcoin holding to 499,226 BTC, The Block previously reported.
This is part of Strategy's larger "21/21 Plan," unveiled in October, aiming to raise $42 billion in capital over three years. This capital is divided equally between $21 billion in equity and $21 billion in fixed-income securities. The firm has already issued around 80% of the targeted $21 billion in equity, and as a result, it has been seeking to issue more fixed-income securities.
Bitcoin traded for about $81,321 after falling 1.70% in the past 24 hours, as of 10:07 a.m. ET (14:07 UTC) on Mar. 18, according to The Block's Bitcoin Price Page.
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