Bitcoin treasury company Strategy, formerly MicroStrategy, announced the pricing of its STRF offering on Friday, upsizing the deal from $500 million to $722.5 million.
Strategy will offer 8,500,000 shares of its 10% Series A Perpetual Strife Preferred Stock at $85.00 per share, according to a statement, with the sale set to close on March 25, pending customary closing conditions. The proposed offering was initially announced on Tuesday.
The company estimates that net proceeds from the offering will be approximately $711.2 million after deducting underwriting discounts, commissions and other expenses.
Strategy said it plans to use the net proceeds from the offering for general corporate purposes, including the acquisition of bitcoin and for working capital.
STRF will accumulate cumulative dividends at a fixed rate of 10% per annum on the stated amount of $100 per share. Regular dividends will be payable quarterly if declared by Strategy's board of directors, starting on June 30. Unpaid dividends will accumulate and compound at an increasing rate, up to 18% per annum.
The company can redeem all shares of the preferred stock under certain conditions, such as if fewer than 25% of the originally issued shares remain or if certain tax events occur. In case of a major company event, known as a "fundamental change," holders can require the company to repurchase their shares at the stated amount plus any accumulated and unpaid dividends. The liquidation preference starts at $100 per share and may adjust based on market conditions or recent sale prices.
Strategy tapped major financial institutions, including Morgan Stanley, Barclays Capital, Citigroup Global Markets and Moelis & Company, as joint book-running managers for the STRF offering.
The STRF sale follows the company's previously announced plan to raise up to $21 billion via its perpetual strike preferred stock, STRK, on March 10. Last week, it sold 123,000 STRK shares for approximately $10.7 million. As of March 16, $20.99 billion worth of STRK shares remain available for issuance and sale under the program.
The STRF offering is also in addition to Strategy's "21/21 plan," which targets a total capital raise of $42 billion in equity offerings and fixed-income securities for bitcoin acquisitions.
On Monday, Strategy announced it had acquired an additional 130 BTC for approximately $10.7 million at an average price of $82,981 per bitcoin—much lower than many of its prior bitcoin purchases, which have run into the billions.
The company now holds 499,226 BTC, worth over $41 billion. Strategy’s total holdings were bought at an average price of $66,360 per bitcoin, a total cost of around $33.1 billion, including fees and expenses, according to the company's co-founder and executive chairman, Michael Saylor. To put that in perspective, Strategy holds almost 2.4% of bitcoin’s total 21 million supply.
Strategy’s $78.6 billion market cap trades at a significant premium to its bitcoin net asset value, with some investors airing reservations about the firm's premium to NAV valuation and its increasingly numerous bitcoin acquisition programs in general.
Strategy's class A common stock, MSTR, closed down 0.7% on Thursday at $302.07 and is down 2% in pre-market trading on Friday. It has gained over 112% during the past year but only 0.7% year-to-date, according to The Block's Strategy Price page.
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