Michael Saylor Seeks to Restart Strategy's Financing Engine, Daily Dividend Preferred Stock Proposal May Pass

BlockBeats news, September 30, according to Bloomberg, Strategy Executive Chairman Michael Saylor is seeking to adjust the company's preferred stock dividend mechanism, proposing to change the dividends on billions of dollars of preferred stock from semi-monthly or quarterly payments to daily payments. The annualized yield on the related securities is as high as 12%, and Saylor said the move will help improve liquidity and market efficiency.

Strategy previously mainly raised funds by selling common stock to buy Bitcoin, but as the premium of its common stock relative to its Bitcoin assets disappeared, the company turned to issuing perpetual preferred stock that does not dilute common shareholders' equity. Such securities have no fixed repayment date and can provide Strategy with a new source of financing.

Strategy currently has more than $14 billion of preferred stock outstanding. Although the company has repurchased more than $1 billion of floating-rate preferred stock STRC, it has still been unable to issue new STRC since May. Analysts pointed out that increasing the dividend frequency mainly reduces dividend-related volatility, cannot eliminate credit and Bitcoin price risks, and may not necessarily improve market liquidity.

Shareholder voting on the proposal will end on October 28. Given that Saylor is Strategy's major shareholder, the proposal is expected to pass.