Strategy, previously 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 holds the largest public reserve of Bitcoin and, on March 17, expanded its holdings to 499,226 BTC, pushing the estimated value of its holdings past $41 billion.
Each STRF share carries a $100 liquidation preference and offers a fixed annual dividend rate of 10%. Dividends can be distributed in cash, Class A common stock, or a mix of both, with quarterly payments beginning June 30, 2025, pending board approval. If payments are not made as scheduled, compounded dividends will be paid at a starting rate of 10%, increasing by 100 basis points annually, capping at 18% per annum. Strategy also retains the right to redeem STRF shares under certain conditions, especially if outstanding shares drop below 25% of the total issuance.
The new offering has sparked concerns among crypto community members about the firm’s financial health. Simon Dixon warned that Strategy’s commitment to a 10% perpetual dividend presents financial risks due to insufficient dollar revenue and reliance on a Bitcoin-based balance sheet. He compared this to the Long-Term Capital Management collapse, suggesting nationalization might be an option if the company faces distress. WhalePanda echoed these concerns, highlighting the strain of a 10% dividend on a $500 million raise, equating to $50 million in annual payouts—cash the company may not have. BitMEX Research flagged a clause in STRF’s prospectus allowing the board or a committee to choose not to pay accumulated dividends, leading analysts to speculate that Class A MSTR shareholders may never receive a dividend payment.
Twitter: @SimonDixonTwitt, @WhalePanda, @BitMEXResearch
