Strive (ASST), a Nasdaq-listed asset manager with one bitcoin treasury strategy, announced plans Monday for an initial public offering of a new class of preferred stock designed to pay dividends.
The Series A variable rate perpetual preferred stock, called SATA, is intended to pay an initial annual dividend of 12%, paid monthly in cash. The company set to offer 1.25 million SATA to investors, raising funds to acquire more BTC and expand its operations, while the proceeds can also be put towards income-generating assets, working capital or common share buybacks. Strive currently holds just under 6,000 BTC, valued at approximately $637 million at current prices, an amount that will increase to approximately 11,000 coins if it completes its stock merger with Semler Scientific (SMLR).
A near-relentless selling of its common stock since completing a SPAC deal several weeks ago has left Strive trading at a discount to the value of bitcoin on its balance sheet (a mNAV of less than 1). Therefore, issuing common shares for continued bitcoin purchases would have a very dilutive effect on existing shareholders.
The decision to issue preferred shares follows in the footsteps of pioneering bitcoin treasury firm Strategy, which began issuing multiple classes of preferred shares to expand its capital raising options for BTC purchases.
Again in a nod to Saylor and his team. Strive said it plans to keep SATA’s trading range between $95 and $105 per share by adjusting dividend rates within established limits. If dividends are not paid, the rate compounds monthly and eventually reaches up to 20% annually, according to the press release.
Barclays and Cantor Fitzgerald will act as joint bookrunners for the offering, with Clear Street acting as co-leadrunner. A dividend reserve of $12 per share will be set aside to cover the first year of distributions.
ASST shares fell 2.3% on Monday along with a 4% drop in the price of bitcoin to $106,000. SMLR is down 2.5%.
The offering comes as digital asset treasury stocks have plummeted in recent months, with many now trading below the value of the underlying holdings, limiting their ability to raise new funds to continue their cryptocurrency purchases.
