TLDR
- Strive (ASST) is launching 1.25 million preferred shares called SATA with an initial 12% annual dividend paid monthly in cash
- The new preferred stock offering follows Strategy’s (MSTR) capital-raising model for bitcoin purchases
- Strive currently holds just under 6,000 BTC valued at roughly $637 million and will gain 5,000 more coins after merging with Semler Scientific
- ASST common stock has fallen below the value of its bitcoin holdings since completing a SPAC deal, making preferred shares a better fundraising option
- Unpaid dividends on SATA shares will compound monthly up to 20% annually, with Barclays and Cantor Fitzgerald serving as joint book-runners
Strive announced Monday it will offer 1.25 million shares of a new class of preferred stock to fund bitcoin purchases. The move mirrors the capital-raising strategy pioneered by Michael Saylor’s Strategy.
The new shares, called Series A Variable Rate Perpetual Preferred Stock or SATA, will pay an initial 12% annual dividend. Payments will be distributed monthly in cash starting December 15.
The Nasdaq-listed asset manager currently holds just under 6,000 BTC, valued at roughly $637 million. That number will jump to approximately 11,000 coins after Strive completes its all-stock merger with Semler Scientific.
Proceeds from the preferred stock sale will primarily go toward acquiring more bitcoin. The company may also use funds for income-generating assets, working capital, or repurchasing common stock.
Why Preferred Shares Instead of Common Stock
Strive’s common stock has taken a beating since completing a SPAC deal several weeks ago. The shares now trade below the value of the bitcoin on the company’s balance sheet.
This pricing problem makes issuing new common stock a bad deal for existing shareholders. Any new shares would dilute their holdings at unfavorable terms.
Preferred shares solve this problem. They don’t dilute common shareholders as much while still raising capital.
Strategy started this approach earlier, issuing various classes of preferred shares to fund its own bitcoin buying spree. Strive is essentially copying that playbook.
The SATA shares come with a stated value of $100 each. Strive plans to keep them trading between $95 and $105 by adjusting dividend rates within preset limits.
Dividend Structure and Terms
The dividend rate can be adjusted monthly based on the one-month SOFR benchmark. This keeps the payout competitive with prevailing interest rates.
If Strive misses a dividend payment, the rate compounds monthly. It can eventually reach up to 20% annually if dividends remain unpaid.
The company will set aside a $12 per share reserve to cover the first year of dividend payments. This gives investors some protection that they’ll actually receive their cash distributions.
Barclays and Cantor Fitzgerald will serve as joint book-runners for the offering. Clear Street will act as co-manager.
Strive can redeem the shares once they’re listed on Nasdaq or NYSE. The redemption price would be $110 per share plus any accrued dividends.
Shareholders can also force Strive to repurchase shares if a “fundamental change” occurs in the company.
As of October 27, Strive manages over $2 billion in assets through Strive Asset Management LLC. The firm operates with a bitcoin treasury strategy, meaning it holds Bitcoin on its balance sheet as a reserve asset.
Digital asset treasury stocks have struggled in recent months. Many now trade below the value of their underlying crypto holdings, making it harder to raise fresh capital through traditional equity offerings.
ASST shares dropped 2.3% on Monday. Bitcoin fell 4% to $106,000.
Semler Scientific shares declined 2.5% on the same day.
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