Strategy announces a $500 million preferred stock issuance plan, intending to use part of the funds to purchase BTC

Strategy (NASDAQ: MSTR, STRK) announced today (3/18) a plan to issuance 5,000,000 shares of Series A Perpetual Strife Preferred Stock, the issuance of which has been registered under the Securities Act of 1933 and will be publicly offered subject to market conditions and other conditions.

According to the announcement, part of the funds from this issuance will be used to purchase Bitcoin and will also be used as general operating funds. This move is consistent with the strategy of actively increasing Bitcoin holdings as a corporate asset in recent years, further solidifying its position as a global 'Bitcoin Treasury' company.

Preferred stock conditions: 10% fixed annual interest, unpaid dividends can accumulate up to 18%

Strategy indicates that these perpetual preferred shares will enjoy an annual dividend rate of 10.00% and will be paid quarterly on March 31, June 30, September 30, and December 31 each year, with the first payment date set for June 30, 2025.

If the current dividends cannot be paid, the unpaid portion will accumulate as "compounded dividends," and the annual interest rate will increase by 100 basis points (bps) every quarter on the original 10% basis, up to a maximum of 18% annual interest rate. This means that if dividend payments are delayed, investors may ultimately receive higher returns, but it also demonstrates the risk of the investment.

Redemption clause: repurchase is possible if holding is less than 25% or under specific tax conditions

Strategy has also established specific redemption provisions for this issuance of perpetual preferred stock:

When the number of preferred shares in circulation in the market is less than 25% of the initial issuance total, the company has the right to choose to redeem all of them.

If specific tax events are triggered, the company may also choose to redeem all preferred shares.

The redemption price will be calculated based on the cumulative dividends and paid in cash.

In addition, if a Strategy experiences a 'fundamental change,' such as a significant corporate restructuring or acquisition, preferred stockholders may choose to request the Strategy to repurchase their preferred shares for cash, including accrued unpaid dividends.

issuance details and market impact: top investment banks participate, enhancing market confidence

This preferred stock issuance will be jointly underwritten by four well-known investment banks, including:

Morgan Stanley & Co. LLC

Barclays Capital Inc.

Citigroup Global Markets Inc.

Moelis & Company LLC

The issuance will be conducted through the existing registration system of the U.S. Securities and Exchange Commission and can only be purchased through the formal prospectus. This issuance also aligns with the recent fundraising strategy of Strategy, as the company has been acquiring bitcoins in large quantities in recent years through equity and debt financing, using it as a significant component of its financial assets.

Bitcoin's strategy is upgraded again: financing to buy BTC, promoting the concept of 'digital capital'

Strategy has long been committed to the bitcoin capitalization strategy, defining BTC as "digital gold" or "digital capital". The company not only increases its BTC holdings through proprietary cash flow and financing tools, but also actively promotes the development of the cryptocurrency market, providing investors with diversified investment products that combine stocks, fixed income, and bitcoin.

Strategy emphasizes in the statement that this strategy of treating bitcoin as a financial asset is to provide investors with more flexible digital capital allocation options. This not only strengthens its leading position in the two major fields of blockchain and enterprise analytics software but also allows the company to have a greater say in the global digital asset market.

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