The company disclosed that last week, Strategy repurchased $1.5 billion in convertible notes for approximately $1.38 billion, using the majority of its previously reserved cash for debt repayment and dividends. After the repurchase, the company’s dedicated cash reserve for paying preferred dividends and debt service declined to $871 million, a 61% reduction from the previous $2.25 billion.
This transaction did not involve any Bitcoin. Strategy stated that the company’s holdings of 843,738 Bitcoin remain fully intact. According to the figures cited, this Bitcoin stash is valued at approximately $64.7 billion. Previously, company management had signaled that all asset resources were on the table when addressing its substantial debt burden, leading market participants to closely monitor whether it would sell Bitcoin for the first time in years.
Cash buffer has clearly contracted
This cash buffer was established in December last year, one of its purposes being to alleviate investor concerns about the company’s liquidity and to avoid selling Bitcoin at market lows. Now, following the completion of the debt repurchase, the size of this buffer has significantly decreased.
The article states that Andrew Kang, Chief Financial Officer of Strategy, said the company’s cash levels influence how the market views its financing products, including the floating-rate preferred stock named Stretch (STRC). The product currently has a market value of approximately $10.4 billion, with an annualized dividend yield of 11.5%, paid monthly. According to the company’s internal calculations, this rate corresponds to an annual obligation of approximately $1.71 billion.
After the repurchase, $6.7 billion in debt remains outstanding.
Strategy states that after repurchasing $1.5 billion in convertible notes for approximately $1.38 billion, the company still has approximately $6.7 billion in outstanding debt. This debt can be converted into common stock under certain conditions, with a portion potentially subject to repurchase by investors as early as September 2027.
The results show that the company prioritized using cash to settle its debts rather than selling Bitcoin. For a strategy centered on a Bitcoin treasury reserve, this means its short-term liquidity buffer has weakened, but its core holding strategy remains unchanged.
The company stated that it will gradually replenish its cash reserves.
Andrew Kang stated in the announcement that Strategy remains committed to maintaining adequate cash reserves and will gradually replenish cash through sales of Digital Capital, Digital Credit, and Digital Equity, based on market conditions.
The market had been closely watching whether the company would sell its Bitcoin. The report noted that on Myriad, a prediction market operated by Dastan, the parent company of Decrypt, traders’ estimated probability of Strategy selling Bitcoin this year has dropped from 85% a week ago to 71%.
Additional information: Previously, analysts believed that Strategy’s early establishment of a cash buffer at the end of last year helped alleviate concerns about its ongoing ability to raise capital in the markets.