Discharge of responsibility: The analyst who wrote this piece has Strategy (MSTR) actions.
Strategy (MSTR), the American company that has made the purchase of Bitcoin (BTC) a key corporate policy, recently expanded its financial tools game with the introduction of a second perpetual preferred stock of series A, which adds to its growing line of capital market instruments.
The company is selling 8.5 million shares of the new offer, called Strife (STRF), at $ 85 each, which gives it $ 711.2 million net for Bitcoin purchases. That is above an initial objective of $ 500 million. The sale ends later on Tuesday. The previous preferred broadcast of the strategy, Strike (STRK), initially raised $ 563 million.
A preferred perpetual action is between the debt and the common heritage in the capital structure, which generally offers dividends and greater price stability. That makes it attractive to investors looking for less volatility and more predictable performance. Unlike common shares owners, holders do not obtain vote rights.
Strf pays an annual dividend of 10% for an established $ 100 amount, with payments made quarterly in cash. If the strategy loses a dividend, the amount is exhausted by an additional 1% per year to a maximum dividend rate of 18%, creating an incentive for appropriate payments.
The strategy can redeem all HRF actions if less than 25% of the original issuance or under certain tax events, in which case the shareholders would receive the liquidation preference plus any unpaid dividends. In addition, in the case of a “fundamental change”, the holders can force the company to repurchase their actions in the amount declared plus any accumulated dividends.
Lower dividends in Strk
In contrast, Strk offers an annual dividend of 8% based on its liquidation preference of $ 100, although effective yield decreases as Strk prices increase. Unlike Strf, Strk includes a conversion function, allowing holders to exchange their preferred shares to shares common to a ratio of 10: 1 if the price of common shares reaches $ 1,000, offering capital rise. That means that the new problem works even more as a fixed income security, which makes it the least volatile of the two.
While Strk can appeal to investors seeking a combination of yield and a possible appreciation of capital, Strf is clearly aimed at those that prioritize the income and stability of capital. To support these dividend payments, the strategy will depend on a combination of operational cash flow, the income of the convertible debt offers and the sales of shares in the market (ATM) in the common shares.
The strategy also has an open ATM program for Strk, recently buying 130 BTC, and has about $ 3.57 billion in its automatic cashier through common actions, which gives it significant flexibility to finance dividend commitments while continuing to chase its bitcoin accumulation strategy.
The company’s shares increased more than 10% on Monday, at which time it had 506,137 BTC.
