Michael Saylor said this month for the first time that the company is 'likely' going to short some Bitcoin to fund maneuvers.
A strategy signaled this Friday (15) that it's taking big steps to reduce its convertible debt, celebrating a deal to buy back $1.5 billion in notes maturing in 2029.
The Bitcoin buyer company reported in a document that it expects to pay around $1.38 billion to settle a debt it incurred to expand its crypto reserves by November 2024, representing a significant chunk of the $8.2 billion borrowed by the company in recent years.
Co-founder and executive chairman Michael Saylor indicated in February that the company would seek to 'equitize' its convertible notes over the next three to six years — allowing investors to convert them into common stock if the shares exceed a certain threshold.
As the company, which holds $65 billion in Bitcoin, increasingly relies on its main preferred stock, STRC, to expand its Bitcoin reserves, its efforts to pay down some of its convertible debt align with a broader deleveraging trend.
Although Strategy's Bitcoin reserves showed billions in losses earlier this year — with the digital asset dropping to $62,850 in February — the looming obligations of its upcoming maturities tested confidence in the company's long-term sustainability. These issues were exacerbated by the regular dividend payments that Strategy committed to making through STRC.
Shares of the largest corporate Bitcoin holder traded at around $178 shortly after market open this Friday, according to Yahoo Finance. Year-to-date, the company's share price has risen 18%, although it still trades well below its peak of $457 last year.
In the document, the Strategy stated it intends to finance the buybacks using available cash reserves, funds from its common stock offering in the market, and/or proceeds from the sale of Bitcoin.
Strategy may sell Bitcoin
Despite cultivating a buy and hold attitude towards Bitcoin for years, Saylor said this month during the company's first-quarter earnings call: 'We will probably sell some Bitcoin to fund a dividend, just to hedge the market — just to send the message that we did it.'
The remark was made in reference to STRC, which currently offers an annual dividend of 11.5% paid monthly. Since the Strategy began offering the product to investors in July, the market capitalization of STRC has skyrocketed to $8.4 billion, amid increased issuance in recent months.
When the Strategy repurchases the notes maturing in 2029, the company will have $1.5 billion in convertible debt outstanding from that transaction. Additionally, the company issued approximately $1 billion in notes that investors can force the company to buy back as early as September 2027.
The company’s efforts to pay down debt come as other firms plan similar moves. On Thursday, Strive, which manages the ninth largest Bitcoin reserve, announced it had eliminated outstanding debt by repurchasing long-term notes at fair value.#MichaelSaylor #BTC $BTC
