Strive (ASST), a Nasdaq-listed asset manager with a bitcoin treasury strategy, announced plans Monday an initial public offering of a new class of preferred shares designed to pay dividends.
The Series A Variable Rate Perpetual Preferred Stock, dubbed SATA, aims to pay an initial 12% annual dividend, paid monthly in cash. The company set to offer 1.25 million SATA to investors, raising funds to acquire more BTC and expand its operations, while proceeds may also go toward income-generating assets, working capital or repurchasing common stock. Strive currently holds just under 6,000 BTC, valued at roughly $637 million at current prices, an amount that will rise to roughly 11,000 coins should it complete its all-stock merger with Semler Scientific (SMLR).
A nearly unrelenting sell-off in its common stock since completing a SPAC deal several weeks ago, has left Strive trading at a discount to the value of the bitcoin on its balance sheet (an mNAV of below 1). Thus, issuing common stock for continued bitcoin purchases would be highly dilutive to existing shareholders.
The move to instead issue preferred stock follows the footsteps of pioneering bitcoin treasury firm Strategy, which began issuing various classes of preferred shares to broaden its options to raise capital for BTC purchases.
Again in a nod to Saylor and team. Strive said it plans to maintain SATA’s trading range between $95 and $105 per share by adjusting dividend rates within set limits. If dividends go unpaid, the rate compounds monthly, eventually reaching up to 20% annually, per the press release.
Barclays and Cantor Fitzgerald will act as joint book-runners for the offering, with Clear Street as co-manager. A $12 per share dividend reserve will be set aside to cover the first year of distributions.
ASST shares are lower by 2.3% on Monday alongside a 4% slide in the price of bitcoin to $106,000. SMLR is down 2.5%.
The offering comes as digital asset treasury stocks crumbled over the past months, many now trading below the value of the underlying holdings, limiting their ability to raise fresh funds to continue their crypto purchases.