Strategy prices new STRE preferred shares to fund Bitcoin accumulation

Crypto treasury company Strategy is moving forward with its plan to expand Bitcoin holdings, pricing a new euro-denominated perpetual preferred stock designed to fund additional crypto purchases.

The company said on Friday that its Series A Perpetual Stream Preferred Stock (STRE) will debut at 80 euros ($92.50) per share, raising an estimated 608.8 million euros in net proceeds. Strategy plans to use the funds to buy more Bitcoin (BTC) and for general corporate purposes. The stock offering is expected to settle on Nov. 13.

The new STRE shares are senior to 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 debt.

STRE term sheet and specifications. Source: Strategy The STRE offering will not be available to retail investors in the European Union or the United Kingdom, Strategy said.

The latest capital raise comes after the company had slowed its pace of acquisitions in October amid a general downturn in crypto treasury companies and a decline in the broader crypto market.

Related: Saylor says Strategy unlikely to buy up rivals, as there’s too much uncertainty

Strategy is struggling amid a downturn in treasury companies

Strategy posted $2.8 billion in revenue in Q3, down from $10 billion in Q2, and the company’s stock has been in a downtrend since July.

Ratings service S&P Global Ratings slapped Strategy with a B- credit rating in October, classifying the company as a “non-investment grade” entity featuring speculative characteristics.

Strategy’s stock has declined alongside other crypto treasury companies. Source: TradingViewFor context, the S&P’s top credit rating is AAA, 15 levels higher than B-. A rating of BB and lower is considered “non-investment grade.”

S&P said the company’s concentration of BTC holdings poses a risk to investors, and that it is too narrowly focused on BTC rather than diversifying its business operations and income streams.

Despite this, Strategy is unlikely to liquidate its BTC holdings during the next crypto bear market or go bust, analyst and BTC investor Willy Woo said.

The reason is that the company’s debt maturities are spaced out and manageable, making the likelihood of a forced liquidation to meet debt obligations low, Woo said.

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