- Strategy may use Bitcoin sales, equity offerings, or cash reserves to fund the note repurchase.
- Investors reacted cautiously as MSTR shares fell after the company disclosed possible Bitcoin sales.
- Michael Saylor said future preferred stock offerings could continue supporting Bitcoin accumulation.
Strategy disclosed in an 8-K filing that it plans to repurchase about $1.5 billion in outstanding 0% Convertible Senior Notes due 2029. The company said the privately negotiated transactions would cost an estimated $1.38 billion in cash and could involve Bitcoin sales, equity offerings, or existing reserves. The deal is expected to settle around May 19, according to the filing.
Funding Options Draw Market Attention
The company stated that funding for the repurchase could come from cash on hand and at-the-market equity sales. However, Strategy also listed potential Bitcoin sales as another financing option. That detail quickly drew market attention because the company has consistently expanded its Bitcoin holdings.
According to the filing, the repurchased notes were priced at nearly 8% below par value. Strategy also said the final repurchase amount could change depending on the performance of MSTR stock during a specified pricing period.
Meanwhile, the announcement followed another Bitcoin purchase by the company earlier this month. Strategy recently acquired $43 million worth of Bitcoin and also generated about $206.61 million through STRC preferred stock issuance.
As the financing discussion continued, MSTR shares fell more than 5% shortly after markets opened. The decline came as investors assessed the possibility of Bitcoin liquidation despite no confirmed sale plans.
Saylor Outlines Bitcoin Capital Strategy
During Strategy’s May 5 earnings call, Executive Chairman Michael Saylor discussed a broader capital framework tied to Bitcoin accumulation. Saylor explained that proceeds from STRC preferred stock offerings would support additional Bitcoin purchases over time.
According to the company, Strategy currently holds 818,869 BTC valued at more than $65 billion. The firm estimated unrealized gains at about $3.9 billion based on Bitcoin prices near $80,000.
Saylor also said Strategy’s breakeven annual Bitcoin appreciation rate stands near 2.3%. He added that Bitcoin sales used for obligations or dividends could be offset through new capital raised from preferred stock issuance.
The company noted that all repurchased convertible notes will be canceled after the transactions close.