Strategy Inc. announced on June 29 the adoption of a Digital Credit Capital Framework that includes a program allowing the company to sell Bitcoin (BTC) to fund its operations and reserves.
- The framework consists of five main components: a U.S. dollar reserve policy, a revised dividend policy for its Variable Rate Series
- A Perpetual Stretch Preferred Stock (STRC), a digital credit securities repurchase program, a class A common stock repurchase program, and a Bitcoin monetization program.
Under the newly authorized Bitcoin Monetization Program, the company’s board approved the potential sale of BTC to generate up to $1.25 billion for its U.S. dollar reserve. The company noted that the program can also be used to fund preferred stock dividends, pay interest expenses, and finance repurchases of its digital credit securities or class A common stock.
U.S. Dollar Reserve and Dividend Adjustments
According to the company statement, Strategy holds a U.S. dollar reserve of approximately $2.55 billion as of June 28. The board-approved policy mandates that these funds can only be used to pay dividends on preferred stock and interest on outstanding debt, unless otherwise authorized by the board.
The company also announced an increase in the regular annual dividend rate for its STRC preferred stock to 12.00%, effective for semi-monthly periods starting on or after July 1. Management stated that the adjustment is intended to support the corporate objective of having STRC trade near its $100 stated amount.
Stock and Security Repurchase Authorizations
The framework establishes a repurchase program of up to $1.0 billion for the company’s outstanding digital credit securities, including its STRC, STRF, STRD, and STRK preferred stocks. Strategy noted that these buybacks will not be funded by the U.S. dollar reserve and may instead utilize proceeds from BTC sales.
Additionally, the company authorized a separate repurchase program of up to $1.0 billion for its class A common stock. Strategy stated that both repurchase programs have no fixed expiration dates and do not obligate the company to acquire any specific amount of securities.
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