Strategy Aims to Raise $21 Billion Through Preferred Stock to Expand Bitcoin Holdings
In a bold financial maneuver that has caught the attention of both cryptocurrency enthusiasts and traditional investors alike, Strategy – the company that rebranded from MicroStrategy – has unveiled plans to raise up to $21 billion by selling its 8% Series A perpetual preferred stock.
According to documents filed with the Securities and Exchange Commission on Monday, the company isn't rushing to sell all shares at once. Instead, Strategy plans to methodically offer its STRK shares through various channels – including at-market sales, private negotiations, and block trades – depending on market conditions and opportunities that arise.
What's particularly interesting about this move is how the proceeds will be allocated. While the company mentioned "general corporate purposes" in its statement, Strategy made no secret about its primary intention: acquiring more bitcoin to add to its already substantial holdings, while maintaining sufficient working capital for operations.
The financial structure of this offering has some notable features that potential investors should consider. Each STRK share comes with a $100 liquidation preference and will accumulate dividends at a fixed 8% annual rate – not a small sum in today's market. These dividends won't be paid automatically, though; Strategy's board will need to declare them each quarter.
This isn't Strategy's first foray into raising capital for cryptocurrency investments. The latest offering complements what the company calls its "21/21 plan" – an ambitious initiative targeting $42 billion in total capital raises through a combination of equity offerings and fixed-income securities, all directed toward bitcoin acquisitions.
As it stands, Strategy has amassed an impressive 499,096 bitcoin, valued at over $41 billion. Interestingly, the company's latest 8-K filing reveals it didn't sell any Class A common stock last week under its at-market equity program to finance new bitcoin purchases. Their current holdings were acquired at an average price of $66,357 per bitcoin, representing a total investment of roughly $33.1 billion including various fees and expenses.
For those unfamiliar with perpetual preferred stock, here's what makes it different: unlike bonds with fixed maturity dates, these securities have no predetermined redemption timeline. Instead, they continue paying dividends for as long as the issuing company remains in business. STRK shareholders will have opportunities to convert their shares into Class A common stock under specific conditions, with provisions for cash payments in lieu of fractional shares.
Strategy has built in some flexibility for itself as well. The company maintains the right to repurchase all outstanding preferred stock if the total value drops below 25% of the originally issued amount, or if certain tax events occur. Shareholders aren't left without options either – if a "fundamental change" occurs within the company, they can require Strategy to buy back their shares.
Friday's market close reflected some investor caution, with STRK falling 2.1% to $92.40. Strategy's Class A common stock (MSTR) experienced a steeper decline, closing down 5.6% at $287.18, according to TradingView's market data.
As the cryptocurrency market continues its volatile journey, Strategy's aggressive accumulation strategy represents one of the most significant corporate bets on bitcoin's long-term value proposition.