Strategy (formerly known as MicroStrategy) has announced plans to raise additional capital through a Strife Preferred Stock (STRF) offering.
In a March 18 announcement, the firm intends to issue 5 million shares of its Series A Perpetual STRF stock, subject to regulatory approval and market conditions. The capital raised will be directed toward corporate operations, including Bitcoin acquisitions and general expenses.
This new offering follows Strategy’s plans to raise $21 billion from its Strike (STRK) preferred stock.
Strategy is the largest public holder of Bitcoin. On March 17, the firm expanded its Bitcoin reserves to 499,226 BTC, pushing the estimated value of its holdings past $41 billion.
STRF
According to the statement, each STRF share carries a $100 liquidation preference and offers a fixed annual dividend rate of 10%.
The company has outlined that dividends can be distributed in cash, Class A common stock, or a mix of both. Pending approval from Strategy’s board, shareholders will receive quarterly dividend payments beginning June 30, 2025.
Strategy said it would pay additional compounded dividends if payments were not made as scheduled. The compounded dividend rate starts at 10% and increases by 100 basis points annually.
If outstanding dividends remain unpaid, this rate will continue increasing annually by 100 basis points until it reaches a cap of 18% per annum.
Strategy also retains the right to redeem STRF shares under specific conditions, particularly if the outstanding shares drop below 25% of the total issuance. Regulatory or tax-related events may also trigger redemption.
Financial risks
Strategy’s new offering has sparked significant concerns among crypto community members about the Bitcoin-focused firm’s financial health.
Simon Dixon warned that Strategy’s commitment to a 10% perpetual dividend presents significant financial risks despite lacking sufficient dollar revenue and relying on a Bitcoin-based balance sheet.
Dixon compared the situation to Long-Term Capital Management, a hedge fund that collapsed and required a bailout. He speculated that if Strategy faces financial distress, nationalization might become an option for the US government.
Pseudonymous Bitcoin analyst WhalePanda echoed similar concerns, suggesting that Strategy’s offering appears desperate. He highlighted the financial strain of a 10% dividend on a $500 million raise, translating to $50 million in annual payouts—cash the company may not have.
BitMEX Research also flagged a clause in STRF’s prospectus stating that the board or a committee could choose not to pay accumulated dividends for any reason.
Considering this, analysts at BitMEX speculated that Class A MSTR shareholders may never receive a dividend payment.
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