Strategy Announces Initial Public Offering of Perpetual Preferred Stock

• Strategy plans to raise funds through a $500M IPO of Series A Perpetual Stretch Preferred Stock.
• STRC Stock offers 9% initial dividends, with monthly payments starting in August 2025.
• Strategy has the right to redeem STRC Stock, with conditions including $250M outstanding.

Strategy™ (Nasdaq: MSTR, STRK, STRF, STRD) has announced plans for an initial public offering (IPO) of its new Variable Rate Series A Perpetual Stretch Preferred Stock (referred to as “STRC Stock”). The IPO will offer 5,000,000 shares, which will be available to select investors. Subject to market conditions, the offering will be registered under the Securities Act of 1933 and is intended to raise funds for general corporate purposes, including the acquisition of Bitcoin and working capital.

The STRC Stock will accumulate cumulative dividends at a variable rate, initially set at 9.00% per annum, based on a stated amount of $100 per share. Regular monthly dividends will be payable beginning on August 31, 2025, provided they are declared by Strategy’s board of directors or an authorized committee. However, Strategy holds the right to adjust this dividend rate at its discretion. Any adjustments are limited by certain restrictions, such as not reducing the rate by more than 25 basis points or below the current one-month term SOFR rate.

In the event of unpaid dividends, the STRC Stock will accrue compounded dividends, which will accumulate monthly at the applicable dividend rate. This process will continue until the unpaid dividends, along with any accumulated amounts, are paid in full.

Redemption Rights and Conditions

Strategy also has the right to redeem the STRC Stock at any time, starting after the shares are listed on a major exchange, such as Nasdaq or the New York Stock Exchange. The redemption price will be $101 per share, plus any accumulated and unpaid regular dividends.

However, this redemption option is subject to certain conditions, such as having at least $250 million of the STRC Stock outstanding and not redeemed at the time of the notice. Additionally, the company has a “clean-up redemption” option if the total number of STRC shares falls below 25% of the original offering, as well as a “tax redemption” option triggered by specific tax-related events.

Repurchase Rights Under Fundamental Changes

In the case of a “fundamental change,” as outlined in the certificate of designations governing the STRC Stock, holders of the shares will have the right to require Strategy to repurchase their shares. The repurchase price will equal the stated amount of the shares, plus any accumulated dividends.

The STRC Stock will have an initial liquidation preference of $100 per share. This value will be adjusted each day to reflect the greater of the stated amount, the most recent sale price of the shares, or the average sale price over the preceding ten trading days. These adjustments are intended to ensure that the stock trades near its stated value of $100 per share.

The IPO will be managed by Morgan Stanley, Barclays, Moelis & Company, and TD Securities, acting as joint book-running managers. Additional co-managers include The Benchmark Company, Clear Street, AmeriVet Securities, Bancroft Capital, and Keefe, Bruyette & Woods. The offering is being conducted under an effective shelf registration statement filed with the U.S. Securities and Exchange Commission (SEC). Interested parties can access the preliminary prospectus through the SEC’s website.