Michael Saylor boasted this morning that his company had expanded its fundraising agreement from $500 million to $722.5 million. However, to close the transaction, he boosted STRF preferred stock dividends and financial terms and removed those details from his tweets.
Specifically, Strategy (formerly MicroStrategy) wanted to sell 5 million shares of STRF preferred stock as close to a $100 liquidation priority as possible. Instead, the company reduced the price of these stocks from 15% to $85.
A liquidation preference is the right of a particular investor to receive the investment first in the event of a liquidity event such as dividends, dissolutions, or payments.
In addition to a 15% discount on liquidation appetite, the strategy agreed to maintain a dividend rate of 10% at the full $100 per share. Therefore, the even sweeter outcome of that discount is that investors 11.76% of dividend rate Because the purchase price is low.
As a final sweetener, the liquidation preference for STRF shareholders starts at $100 and not only does not decrease, it can actually increase. In fact, if a higher priced STRF sales are then occurring by the company, or if the price of the STRF rises in NASDAQ for several weeks, STRF shareholders will be further liquidated preferences.
For enlarged generosity, up-sized rounds
Naturally, net amounts arrive at a strategy from offering. It will reach around $711.2 million, much higher than the original target of $500 million. However, the increased amount is mathematically related to the terms of the transaction. Higher prioritization of the company’s capital stack and a larger dividend rate.
The strategy involves most of the funds from this preferred stock sales. Buy more Bitcoin (BTC).
Read more: Michael Saylor’s Bitcoin Announcement No longer puts MSTR stocks
There was a mix of reaction to the announcement. Some called it bullish for the company and BTC prices. Peter Schiff mocked it. Others questioned who would hold the bag if BTC continued its bear market trajectory.
Generally speaking, critics have ammunition in many words. The strategy itself is in a worry-like red position with the bear market for months since the recent purchase of Bitcoin. MSTR stocks have fallen 44% since their all-time high in November.
