Strategy plans $4.2 billion STRD preferred stock sale via ATM program to fund more bitcoin purchases

Strategy (formerly MicroStrategy) has entered into a sales agreement to issue and sell shares of its 10.00% Series A Perpetual Stride Preferred Stock (STRD) of up to $4.2 billion via an at-the-market program.

The strategy plans to sell perpetual Stride preferred stock through the ATM program in a gradual and strategic manner, taking into account the market price and trading volume at the time of each sale. Sales may include negotiated transactions or block trades.

The company intends to use the proceeds from the offering for general corporate purposes, including the acquisition of bitcoin and for working capital, according to a statement on Monday. Strategy may also use the net proceeds to pay dividends on its 10% Series A Perpetual Strife Preferred Stock and 8% Series A Perpetual Strike Preferred Stock, the firm said.

Bitcoin buying spree pause

Earlier on Monday, Strategy disclosed it had paused its bitcoin spending spree for the first time in three months, acquiring no additional bitcoin between June 30 and July 6, according to an 8-K filing with the Securities and Exchange Commission.

Strategy continues to hold a total of 597,325 BTC — worth over $65 billion — bought at an average price of $70,982 per bitcoin for a total cost of around $42.4 billion, including fees and expenses, according to the company’s co-founder and executive chairman, Michael Saylor. That’s the equivalent of more than 2.8% of bitcoin’s total 21 million supply and implies around $22.6 billion of paper gains.

Last week’s pause is the first time the firm has not bought bitcoin since the March 31 to April 6 period — coinciding with the release of its Q1 results on April 7, when Strategy disclosed $5.91 billion in unrealized losses on its bitcoin treasury for the period.

Following suit, Strategy released its Q2 results on Monday, disclosing an unrealized gain on digital assets of $14.05 billion. As a result, it also incurred an associated deferred tax expense of $4.04 billion.

The firm has been using proceeds from at-the-market sales of its Class A common stock, MSTR, perpetual Strike preferred stock, STRK, and perpetual Strife preferred stock, STRF to fund its bitcoin acquisitions in recent weeks, as well as from an initial STRD offering. During the quarter ended June 30, Strategy received aggregate net proceeds of $6.8 billion from these sales, the firm said in the filing.

Strategy’s STRK, STRF and STRD perpetual preferred stock ATM programs are in addition to the firm’s “42/42” plan, which targets a total capital raise of $84 billion in equity offerings and convertible notes for bitcoin acquisitions through 2027 — upsized from its initial $42 billion, “21/21” plan, of which the equity side ATM program was recently depleted.

MSTR is currently down 1.3% in pre-market trading on Monday, according to TradingView.

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