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Strategy, the globe’s largest corporate Bitcoin possessor, intends to secure nearly $1 billion through a stock issuance to finance more Bitcoin acquisitions.
The firm, directed by executive chairman Michael Saylor, aims to release 11,764,700 shares of 10.00% Series A Perpetual Stride Preferred Stock at a public offering price of $85 per share.
Strategy anticipates generating approximately $979.7 million from the net proceeds after accounting for the underwriting discounts and commissions associated with the firm’s offering costs, as per a June 6 notification.
The company intends to utilize the nearly $1 billion for “general corporate purposes, which include the acquisition of Bitcoin and for operational capital.”
Related: Swedish MP suggests Bitcoin reserve to finance minister
This action quadruples the company’s previously disclosed $250 million raise and unveils a new funding avenue beyond its traditional use of common stock and convertible debt.
In contrast, Strategy’s perpetual preferred stocks will provide professional and institutional investors non-cumulative dividends equivalent to 10% of the specified amount.
At the current value of $103,800 per Bitcoin (BTC), the $1 billion would empower Strategy to procure an additional 9,633 BTC, which is significantly higher than its most recent acquisition of 705 Bitcoin for $75.1 million announced on June 2.
Related: Blockchain Group adds $68M in Bitcoin to corporate treasury
Strategy’s Bitcoin premium rises to +112%: VanEck
Strategy’s Bitcoin premium has increased to over 112% in comparison to spot Bitcoin prices, according to VanEck.
“We estimate a +112% premium to the combined fair value of MSTR’s BTC and core software business, driven by anticipations of future BTC accumulation, regulatory advantages, and speculative positioning,” the asset manager stated in a May 22 research report.
“Each time MicroStrategy issues new shares to retail investors — shares backed by Bitcoin worth only a fraction of the stock price — the company retains the difference and presents it as Bitcoin yield,” 10x Research CEO and head of research, Markus Thielen, informed Cointelegraph.
Nevertheless, the premium is lower than that of Japanese investment firm Metaplanet’s Bitcoin premium, which surged to $596,154 on May 27, indicating that shareholders are paying more than fivefold for Bitcoin exposure through Metaplanet shares.
Investors who fail to grasp the significance of a firm’s net asset value (NAV) may be “significantly overpaying for their Bitcoin exposure” on a position that doesn’t offer additional upside leverage, as pointed out in a report by 10x Research published on May 27.
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