Disclaimer: The analyst, who wrote this piece, owns shares in Strategy (Mstr).
Strategy (MSTR), the US company, which has made the purchase of Bitcoin (BTC) into an important business policy, recently expanded its financial tool set with the introduction of another series A eternally preferred stock, adding its growing line of capital market instruments.
The company sells 8.5 million shares in the new offer, called Strife (STRF), to $ 85 each, giving it a net $ 711.2 million for Bitcoin purchases. That’s up from an initial target of $ 500 million. The sale ends later Tuesday. Strategy’s previous preferred issue, Strike (STRK), originally raised $ 563 million.
An eternal preferred stock sits between debt and common equity in the capital structure, which typically offers yield and greater price stability. It makes it appealing to investors seeking lower volatility and more predictable return. Unlike owners of common shares, holders do not receive voting rights.
PRF pays a 10% annual dividend at a specified amount of $ 100 with payments made quarterly in cash. If the strategy misses a dividend, the amount of an additional 1% per year connects each up to a maximum of 18% dividend, creating an incentive for timely payments.
Strategy can redeem all STRF shares if fewer than 25% of the original issue remains or during certain tax events, in which case shareholders would receive the liquidation preference plus any unpaid dividend. In addition, in the event of a “fundamental change”, holders can force the company to repurchase their shares for the specified amount plus any subsequent dividends.
Lower yield from strk
In contrast, STRK offers an 8% annual dividend based on its $ 100 liquidation preference, although the effective yield decreases as the price of the PLAK increases. Contrary to StrF, STRK includes a conversion function that allows the holders to exchange their preferred shares to a common share in a ratio of 10: 1 if the common share price reaches $ 1,000, giving equity upwards. This means that the new version works even more like a fixed income security, making it the less unstable of the two.
While STRK may appeal to investors looking for a mix of dividends and potential capital assessment, StrF is clearly aimed at those who prioritize income and capital stability. To support these dividend payments, strategy will rely on a combination of operational cash flow, revenue from convertible debt offers and marketing (ATM) share sale on the joint share.
Strategy also has an open ATM program in place for STRK, which recently purchased 130 BTC, and has about $ 3.57 billion back on its ATM capacity through the joint stock, providing the significant flexibility to finance dividend obligations while continuing to pursue its Bitcoin accumulation strategy.
The company’s shares rose more than 10% on Monday, when it was 506,137 BTC.
