Strategy has announced its intent to conduct an initial public offering (IPO) of 5,000,000 shares of its Variable Rate Series A Perpetual Stretch Preferred Stock (STRC Stock), subject to market and other conditions. The company intends to utilize the net proceeds from this offering for general corporate purposes, including the acquisition of bitcoin and for working capital.
The STRC Stock will accumulate cumulative dividends at a variable rate per annum on a stated amount of $100 per share. Regular dividends are planned to be payable monthly in arrears on the last calendar day of each month, beginning August 31, 2025, if declared by Strategy’s board of directors. The initial monthly regular dividend rate per annum is set at 9.00%. Strategy reserves the right to adjust this rate for subsequent periods, subject to specific restrictions, such as not reducing the rate by more than 25 basis points plus any excess of the one-month term SOFR rate over its minimum during the prior period, or to a rate below the one-month term SOFR rate. Such adjustments are contingent on all accumulated regular dividends for prior periods being paid in full. Strategy’s stated intention is to manage the dividend rate to maintain the STRC Stock’s trading price near its $100 stated amount. Declared regular dividends will be paid solely in cash, with compounded dividends accruing on any unpaid amounts.
Strategy will have the option to redeem all or a portion of the outstanding STRC Stock on or after its listing on Nasdaq or NYSE, at a cash redemption price of $101 per share plus accumulated and unpaid regular dividends. Partial redemptions require at least $250.0 million aggregate stated amount of STRC Stock to remain outstanding. The company also retains the right to conduct a “clean-up redemption” of all outstanding STRC Stock if the total number of shares falls below 25% of the total shares originally issued, or a “tax redemption” if certain tax events occur. For clean-up and tax redemptions, the price will be the liquidation preference plus accumulated and unpaid dividends.
In the event of a “fundamental change” as defined by the STRC Stock’s governing certificate, holders will have the right to require Strategy to repurchase their shares at the stated amount of $100 plus accumulated and unpaid regular dividends. The liquidation preference of the STRC Stock will initially be $100 per share and will be adjusted daily to be the greatest of the stated amount, the last reported sale price on the preceding trading day (if sales occurred recently), or the arithmetic average of the last reported sale prices over the preceding ten trading days.
Morgan Stanley, Barclays, Moelis & Company, and TD Securities are acting as joint book-running managers for the offering. The Benchmark Company, Clear Street, AmeriVet Securities, Bancroft Capital, and Keefe, Bruyette & Woods are serving as co-managers. The offering is being made pursuant to an effective shelf registration statement filed with the U.S. Securities and Exchange Commission (SEC), accessible via a prospectus supplement and accompanying prospectus on the SEC’s website or by contacting the joint book-running managers.
Strategy, formerly MicroStrategy Incorporated, identifies itself as the world’s first and largest Bitcoin Treasury Company. It has adopted Bitcoin as its primary treasury reserve asset, accumulating it through proceeds from equity and debt financings, as well as operational cash flows. The company’s treasury strategy aims to offer investors varying economic exposure to Bitcoin through its range of securities, including equity and fixed-income instruments. Additionally, Strategy provides AI-powered enterprise analytics software and explores innovation in Bitcoin applications, integrating its analytics expertise with its digital asset growth commitment.
