Strategy, formerly MicroStrategy, is seeking to raise up to $21 billion via sales of its 8% series A perpetual strike preferred stock, STRK, according to a prospectus filing with the Securities and Exchange Commission.
Strategy plans to sell STRK shares over time, potentially through at-the-market sales, negotiated transactions or block trades. The firm intends to use the proceeds from the for general corporate purposes, including the acquisition of bitcoin and for working capital, the firm said in a statement on Monday.
The perpetual strike preferred stock will have a liquidation preference of $100 per share and accumulate cumulative dividends at a fixed rate of 8% per annum. Regular dividends on STRK will be payable quarterly if declared by Strategy’s board of directors.
The sale is in addition to the company's previously announced “21/21 plan,” targeting a total capital raise of $42 billion in equity offerings and fixed-income securities for bitcoin acquisitions, as well as its initial perpetual preferred share offering.
Strategy currently holds holds 499,096 BTC, worth over $41 billion, but did not sell any shares of class A common stock under its at-the-market equity offering program to buy additional bitcoin over the past week, according to its latest 8-K filing. Strategy’s total holdings were bought at an average price of $66,357 per bitcoin, a total cost of around $33.1 billion, including fees and expenses.
Unlike bonds, perpetual preferred stock does not have a maturity date or a mandatory redemption timeline; instead, it pays fixed dividends indefinitely as long as the issuing company remains operational. Strategy's perpetual strike preferred stockholders can convert their shares into class A common stock at certain times and under specific conditions. If they do, they may receive cash instead of fractional shares.
Strategy also has the option to buy back all outstanding preferred stock for cash if the total value drops below 25% of the original issued amount or if certain tax events occur. The redemption price will match the stock’s liquidation value, plus any unpaid dividends, and in some cases, may be based on recent market prices.
If a major company event, known as a "fundamental change," occurs, stockholders can require Strategy to repurchase their shares. The buyback price will be equal to the stock’s liquidation value plus any unpaid dividends.
STRK closed down 2.1% on Friday at $92.40, while Strategy's class A common stock, MSTR, closed down 5.6% at $287.18, according to TradingView.
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