On Monday, Strategy revealed plans for an initial public offering (IPO) of a new series of preferred stock to fund further bitcoin acquisitions. The news follows the company adding 6,220 BTC to its stash.
Strategy Plans STRC Stock IPO at 9% Initial Dividend to Raise Funds for Bitcoin
The company filed for an IPO of 5 million shares of its “Variable Rate Series A Perpetual Stretch Preferred Stock” (STRC Stock) at $100 par value per share, aiming to raise approximately $500 million before expenses.
Net proceeds from the offering are intended for general corporate purposes, including acquiring additional units of bitcoin (BTC) and providing working capital. This marks Strategy’s fourth preferred stock offering designed to fund its bitcoin treasury strategy.
The stretch (STRC) Stock will pay cumulative monthly dividends, starting at an annual rate of 9.00%. Strategy retains the right to adjust this variable rate monthly, subject to specific restrictions aimed at maintaining the stock’s price near its $100 par value. The announcement notes that unpaid dividends will compound monthly.
Strategy can redeem shares under certain conditions, including after listing on a major exchange at $101 per share plus unpaid dividends. Other redemption scenarios include “clean-up” redemptions for small outstanding amounts and “tax redemptions,” both paying the liquidation preference plus dividends.
Morgan Stanley, Barclays, Moelis & Company, and TD Securities are joint book-running managers. Several other firms are co-managers for the offering. Strategy, holding 607,770 bitcoin as of today, utilizes proceeds from equity and debt offerings to accumulate bitcoin as its primary treasury reserve asset. So far, this bet on bitcoin has paid off handsomely.
