Crypto treasury company Strategy is advancing its strategy to enhance its Bitcoin reserves by introducing a new euro-denominated perpetual preferred stock aimed at financing further crypto investments.
The firm announced that its Series A Perpetual Stream Preferred Stock (STRE) will be priced at 80 euros ($92.50) per share, targeting to raise approximately 608.8 million euros in net proceeds. The funds are earmarked for additional Bitcoin purchases (BTC) as well as general corporate needs. This stock issue is scheduled to finalize on November 13.
The newly issued STRE shares have priority over Strategy’s Perpetual Strike (STRK), Perpetual Stride (STRD), and common stock but are subordinate to its Perpetual Strife (STRF), Variable Rate Perpetual Stretch (STRC) shares and outstanding debts.
STRE term sheet and specifications. Source: Strategy
The STRE offering will not be accessible to retail investors in the European Union or the United Kingdom.
This latest fundraising effort comes after the company had restricted its acquisition pace during October due to a general downturn influencing crypto treasury firms and a broader decline in the cryptocurrency market.
Strategy Faces Challenges in a Declining Treasury Market
Strategy generated $2.8 billion in revenue in Q3, a significant drop from $10 billion in Q2, and the company’s share performance has been under pressure since July.
S&P Global Ratings recently assigned Strategy a B- credit rating, categorizing it as a ’non-investment grade’ entity with speculative features.1
Strategy’s stock has declined alongside other crypto treasury companies. Source: TradingView
For reference, S&P’s highest credit rating is AAA, considered 15 levels above B-. Ratings of BB and below are regarded as ‘non-investment grade.’
S&P noted that the company’s heavy reliance on BTC holdings presents risks for investors, recommending that it should diversify its operations and revenue avenues.
Nonetheless, Strategy is deemed unlikely to liquidate its BTC assets during an upcoming crypto bear market. Analyst and BTC investor Willy Woo remarked that the structured timing of the company’s debt looks manageable, reducing the chances of prompted liquidation to settle outstanding debts.
