Strategy to pay $1.38B to buy back $1.5B of its 2029 convertible notes

Strategy (NASDAQ: MSTR) has signed private buyback deals to take out about $1.5 billion of its 0% convertible senior notes due 2029, with the expected cash cost set near $1.38 billion.

The company disclosed its plans through the Form 8-K in reference to item 8.01, other events following its agreements with selected holders on May 14. After closing the transaction, Strategy Corporation intends to retire the debt that it repurchased by halving the debt line.

The registration statement shows the securities that have been registered by Strategy Corporation on the Nasdaq Global Select Market. The common stock is listed as MSTR. The preferred stocks include Strife as STRF, Stretch as STRC, Strike as STRK, and Stride as STRD, with all classes having a par value of $0.001 per share.

The registration statement did not use the report to provide Rule 425 communication, Rule 14a-12 communication, Rule 14d-2(b) communication, or Rule 13e-4(c) communication, as these were not applicable due to their respective boxes remaining unmarked.

Strategy links the final cash bill to MSTR’s trading price before settlement

However, Strategy (NASDAQ: MSTR) will not have the exact buyback amount since it will only be known once the pricing period expires.

In part, the payment depends on the daily volume-weighted average price of MSTR Class A stock during a specific measurement window. Thus, while the headlining payment figure is $1.38 billion, the amount could change depending on the performance of the stock in the measurement window.

The company indicated it intends to make the payments using either cash on hand, cash proceeds from its at-the-market program, proceeds from the sale of securities, or proceeds from Bitcoin sale.

The financing possibilities for the buyback include cash on hand, stock-linked capital issuance, or some reduction in Bitcoin holdings, as Cryptopolitan reported before that Strategy chairman Michael Saylor was considering.

The deal is expected to close on May 19, as long as the usual closing requirements are met. After that, Strategy will cancel the notes it bought back. About $1.5 billion of its 2029 convertible notes will still be left.

The filing also includes standard legal language. Strategy said the document is not an offer to sell securities, and it is not asking anyone to buy them. It also cannot be treated as an offer, sale, or request in any place where that would break the law.

This debt offering is relevant in the current context of Strategy. This is because the company has established a more complex capital structure that now includes various listed preferred securities, common equity program, convertible debt, and even Bitcoin-backed treasury.

STRC posts record volume as Strategy raises capital for more Bitcoin

Stretch preferred stock, trading as STRC, recorded $1.53 billion in volume on Thursday. That was its highest trading day on record. STRC is a perpetual preferred stock issued by Strategy (MSTR), which remains the largest public company holder of bitcoin.

BitcoinQuant said the trading surge helped Strategy fund the purchase of about 11,707 Bitcoins through its at-the-market program, letting the company sell newly issued shares into the market and use the proceeds for more Bitcoin purchases.

The bulk of STRC stocks were exchanged at or above the $100 par value mark during the day. The date was critical too because Friday was the ex-dividend date for STRC, meaning the cut-off date for receiving the next payment. Transactions made after that would not be eligible for dividends.

The trading volume increased by more than four times compared to its 30-day moving average of $331 million. STRC’s yearly cash dividend yield currently stands at 11.5%, distributed monthly.

Right now, STRC is trading at $98 in pre-market, down about 1.7%.

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