Strategy targets 500K BTC by issuing 5 million preferred shares

United States-based Strategy, formerly MicroStrategy, plans to offer 5 million of its Series A Perpetual Strife Preferred Stock to fund its next series of Bitcoin purchases that could push its total holdings to 500,000 BTC.

In a March 18 filing with the US Securities and Exchange Commission, the business intelligence firm said the Perpetual Strife Preferred Stock will accumulate cumulative dividends at a fixed rate of 10% per annum on the stated amount.

How does the offering work?

A preferred stock offering like this allows a company to raise funds without issuing more common stock, which could dilute existing shareholders.

It gives investors fixed dividends and priority over common stockholders, making it a mix of equity and debt-like benefits.

Strategy clarified that these dividends will be payable quarterly—on March 31, June 30, September 30, and December 31—starting June 30, 2025.

Unlike some other dividend structures, these payouts will be strictly in cash.

If dividends are not paid on the scheduled dates, they will accrue additional “compounded dividends” at an increasing rate. Initially, any unpaid dividend will accumulate interest at 11% per annum (10% plus 100 basis points).

However, this rate will rise by an additional 100 basis points for each quarter, and the payment will remain unpaid, capping at 18% per annum.

Strategy also retains the right to redeem all outstanding shares of this stock under specific conditions.

If the number of outstanding shares drops below 25% of the originally issued amount, the company may repurchase all remaining shares for cash.

The liquidation preference for the preferred stock is set at $100 per share. However, this figure is subject to periodic adjustments.

The offering is being managed by Morgan Stanley & Co. LLC, Barclays Capital Inc., Citigroup Global Markets Inc., and Moelis & Company LLC, who are acting as joint book-running managers.

According to the Michael Saylor-led firm, it intends to use the net proceeds from the offering for “general corporate purposes, including the acquisition of Bitcoin and for working capital.”

Strategy holdings near 500K Bitcoin

The offering comes a day after the company announced its smallest Bitcoin purchase to date.

On March 17, Strategy disclosed that it had acquired 130 BTC, marking its lowest single acquisition since its first Bitcoin purchase in August 2020.

Since its first investment, the company has amassed 499,226 BTC at an aggregate cost of $33.1 billion, with an average price of $66,360 per BTC.

If it buys just 774 more BTC, its holdings will surpass 500,000 BTC, equivalent to 2.38% of Bitcoin’s total supply.

As previously covered on Invezz, last month, the company completely overhauled its branding and rebranded itself as Strategy. Per officials, the move was a commitment to its Bitcoin-first strategy.

The latest developments also add to Strategy’s “21/21” roadmap, which entails raising and investing $42 billion in Bitcoin.

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