Strive Offers 16.7% Annual Cash Yield via SATS Preferred Shares

Strive priced seven million shares of SATS preferred stock at $90 each on Oct. 15. Each share carries a $100 stated amount and a $15 annual dividend, representing a contractual dividend rate of 15%. The offering price implies a 16.7% annual cash yield if payments continue in full. The upsized offering is expected to raise $630 million before expenses. Settlement is scheduled for Oct. 20. Strive will use the proceeds to acquire Bitcoin, support Strive's business, buy income-generating assets, or repurchase other shares.

Strive's prospectus sets an initial liquidation preference of $100 per SATS share, subject to adjustments that cannot reduce the preference below $100. The liquidation preference defines a claim under the relevant liquidation provisions, not an everyday right to demand $100 when selling. SATS is perpetual, with no maturity date requiring Strive to return the investor's original purchase price. The market price depends on what another buyer will pay for the dividend stream and the associated risks. A share purchased for $90 could hypothetically trade at $100 or more if buyers accept a lower yield, or fall to $75 despite uninterrupted payments. An investor who pays $90, collects $15 over a year and sells for $75 would recover only the original $90 before costs. Cash yield excludes price changes, fees and taxes. A lower resale price could produce a loss exceeding the dividends, while a higher resale price could increase the investor's return beyond the income received.

SATS ranks ahead of Strive's common shares for dividends and liquidation distributions, but behind all existing SATA preferred stock. Debt and certain subsidiary obligations also take priority over SATS. Strive retains the ability to issue additional securities with equal or higher ranking. Common shareholders receive the value remaining after liabilities and senior claims, while preferred shareholders have contractual payment rights but generally more limited upside.

A simplified example allocates $200 remaining after other liabilities to $100 of senior preferred claims, $50 of junior preferred claims and $50 of common equity. A $40 decline in available assets would first reduce common equity. Another $30 decline would eliminate the remaining common equity and leave junior preferred holders $20 short, while the senior preferred claim remained covered. Common equity therefore provides some protection for junior preferred holders, but that protection decreases as senior claims grow or asset values fall. Bitcoin treasury companies can experience both changes at once. Strive can issue securities to buy more Bitcoin, increasing both Bitcoin holdings and financial claims against the business. Strive's October Bitcoin purchases increased gross Bitcoin per effective common share by just 1.72%, despite a much larger increase in total holdings. SATS terms also provide a holder repurchase right following a defined fundamental change, generally at the $100 stated amount plus accumulated unpaid dividends. Strive has limited redemption rights under specified conditions, but these provisions do not provide an everyday $100 exit.

SATS dividends are scheduled to begin on Nov. 9 and be payable every business day. Seven million shares paying $15 annually imply $105 million in annual SATS dividends. Strive intends to establish a reserve at closing of $22.50 per share, totaling $157.5 million and representing 18 months of scheduled dividends. The reserve provides an initial payment buffer, but the reserve does not establish that Strive can fund payments indefinitely or make Bitcoin an interest-paying asset. Strive's prospectus anticipates further capital raising as a primary source of dividend funding beyond the initial reserve period. SATS buyers rely on Strive maintaining sufficient liquidity for payments, sufficient asset value to support claims and sufficient market confidence for a reasonable resale price.

Strategy has also built a substantial preferred-share business to finance corporate Bitcoin exposure. Companies can fund preferred dividends through cash reserves, new financing, investment income or asset sales. Issuing additional claims creates future obligations, while selling assets reduces holdings the business might otherwise retain. Bitcoin appreciation can increase balance-sheet value, but a transaction must convert that appreciation into spendable cash. A perpetual preferred share can suit investors who prefer a defined income claim over common equity. However, SATS's unusually high indicated yield compensates investors for risks involving payment capacity, claim priority, duration and resale value rather than providing risk-free income.