Strategy (NASDAQ: MSTR) plans to repurchase $1.5 billion in debt at a discount, with Bitcoin sales listed as a potential funding source.
According to an 8-K filing, the company reached a privately negotiated agreement with holders of zero-coupon convertible notes on May 14, with settlement expected around May 19. Filed Pursuant to an agreement with the U.S. Securities and Exchange Commission (SEC), Strategy will pay approximately $1.38 billion to repay the debt at about 92% of its face value. The notes were originally due to mature in 2029.
The final cash repurchase price will be adjusted based on the volume-weighted average price of Strategic Class A common stock during the agreed measurement period, meaning the actual expenditure may change before the transaction is completed.
The strategy lists three potential sources of funds for repurchases, including available cash reserves, proceeds from the share issuance program at market price, and proceeds from the sale of Bitcoin.
Incorporating Bitcoin sales into the financing mechanism is significant. Michael Saylor, Executive Chairman of Strategy, said clarifying earlier this month that the company operates as a "net accumulator" of Bitcoin, while downplaying rumors that Strategy might sell part of its holdings to meet obligations.
Saylor previously stated separately that the company plans to sell a portion of its Bitcoin to pay dividends on its high-yield STRC perpetual preferred shares. These STRC preferred shares were issued by the company to raise funds for purchasing Bitcoin. Saylor also noted that although Strategy now not only buys Bitcoin, the company also plans to maintain buying pressure through incremental additions of 10 to 20 Bitcoin at a time.
The strategy plans to retire the repurchased notes after settlement. After retirement, approximately $1.5 billion in notes maturing in 2029 will remain outstanding, indicating that the company held approximately $3 billion in such notes prior to the transaction.
Strategy holds 818,869 bitcoins, which, at current prices, is worth over $66 billion, making it the largest corporate bitcoin reserve shown on The Block’s treasury tracker.
Last week, the company spent $43 million to purchase 535 bitcoins, after briefly pausing purchases around the release of its first-quarter earnings report.
JPMorgan analysts expect that, according to Strategy, at the current pace, its Bitcoin purchases this year could reach $30 billion due to the high capital efficiency of its STRC issuance plan.