The company known as Strategy has revealed its intention to secure further funding through an offering of Strife Preferred Stock (STRF).
In a statement released on March 18, the firm plans to issue 5 million shares of its Series A Perpetual STRF stock, pending regulatory approval and market conditions. The funds generated will be allocated to corporate activities, including Bitcoin purchases and general expenditures.
This latest offering comes on the heels of Strategy’s efforts to raise $21 billion through its Strike (STRK) preferred stock.
Strategy currently holds the distinction of being the largest public Bitcoin holder. As of March 17, the firm has increased its Bitcoin reserves to 499,226 BTC, bringing the estimated value of its assets to over $41 billion.
STRF
As noted in the announcement, each STRF share includes a $100 liquidation preference and provides a fixed annual dividend rate of 10%.
The firm has stated that dividends may be paid in cash, Class A common stock, or a combination of both. Subject to the board’s approval, shareholders can expect quarterly dividend payments starting June 30, 2025.
Furthermore, the company indicated that it would issue additional compounded dividends if payments are not made as scheduled. The compounded dividend rate begins at 10% and will increase by 100 basis points each year.
If any dividends are due but unpaid, this rate will continue to rise annually by 100 basis points until it reaches a maximum of 18% per year.
Additionally, the firm reserves the right to redeem STRF shares under certain circumstances, especially if the total number of outstanding shares drops below 25% of what was originally issued. Conditions related to regulations or tax matters may also prompt a redemption.
Financial concerns
Strategy’s latest offering has triggered considerable unease within the crypto community regarding the firm’s financial stability.
Simon Dixon cautioned that Strategy’s promise of a perpetual 10% dividend poses substantial financial risks, given its insufficient dollar revenue and dependency on a Bitcoin-heavy balance sheet.
Dixon likened the predicament to that of Long-Term Capital Management, a hedge fund that failed and required a bailout. He speculated that if Strategy finds itself in financial trouble, nationalization could be considered an option by the US government.
The pseudonymous Bitcoin analyst WhalePanda shared similar apprehensions, suggesting that Strategy’s offering seems desperate. He emphasized the financial burden of a 10% dividend on a $500 million raised, equating to $50 million in annual payouts—funds that the company may not possess.
BitMEX Research also highlighted a provision in STRF’s prospectus indicating that the board or a committee may opt not to pay accumulated dividends for any reason.
In light of this, BitMEX analysts speculated that shareholders of Class A MSTR might never see a dividend payment.
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