Strive (ASST), a Nasdaq-listed asset manager with a bitcoin Treasury strategy, announced Monday it plans an initial public offering of a new class of preferred stock designed to pay dividends.
The Series A Variable Rate Perpetual Preferred Share, called SATA, aims to pay an initial annual dividend of 12%, paid monthly in cash. The company will offer 1.25 million SATA to investors, raising funds to acquire more BTC and expand its operations, while the proceeds can also go towards income-generating assets, working capital or common stock buybacks. Strive currently holds just under 6,000 BTC, worth about $637 million at current prices, an amount that will increase to about 11,000 coins if it completes its full merger with Semler Scientific (SMLR).
An almost relentless sell-off of its common stock since the completion of a SPAC deal several weeks ago has left Strive trading at a discount to the value of bitcoin on the balance sheet (an mNAV of less than 1). Thus, issuing common stock for continued bitcoin purchases would be highly dilutive to existing shareholders.
The move to instead issue preferred shares follows in the footsteps of pioneering bitcoin tax company Strategy, which began issuing different classes of preferred shares to expand its ability to raise capital for BTC purchases.
Again in a nod to Saylor and team. Strive said it plans to maintain SATA’s trading range between $95 and $105 per share by adjusting dividend rates within set limits. If dividends remain unpaid, the rate increases monthly, eventually reaching up to 20% annually, according to the press release.
Barclays and Cantor Fitzgerald will act as joint book-runners for the offering, with Clear Street as co-manager. A dividend reserve of $12 per share will be set aside to cover the first year of distributions.
ASST shares are down 2.3% on Monday along with a 4% drop in the bitcoin price to $106,000. SMLR has fallen 2.5 per cent.
The offering comes as equity holdings in digital assets crumbled in recent months, with many now trading below the value of the underlying holdings, limiting their ability to raise new funds to continue their crypto purchases.
