Strategy has unveiled a new capital framework, detailing plans to liquidate a portion of its Bitcoin holdings to fund dividend payments, build cash reserves, and conduct securities buybacks. The company emphasized that its long-term Bitcoin strategy remains intact, disclosing these measures in an 8-K filing to the US Securities and Exchange Commission.
Details of the new capital framework
Dubbed the “Digital Credit Capital Framework,” the plan incorporates a Bitcoin sale program and updates to the dividend policy for STRC preferred shares. As part of this framework, Strategy raised the annual dividend rate for STRC from 11.5% to 12%. In addition, the board has approved distinct buyback programs for both its preferred securities and Class A MSTR shares.
The company says it may sell up to $1.25 billion in Bitcoin to strengthen its cash reserves, pay dividends, cover debt costs, and finance share repurchases. Strategy, led by Michael Saylor, is renowned for its large-scale Bitcoin acquisitions and stands as one of the public companies with the largest Bitcoin holdings on its balance sheet.
Michael Saylor highlighted that, when combining the current cash reserves and the $1.25 billion potential from Bitcoin conversion, the company would have roughly $3.8 billion available to fund dividend payments over an estimated 26 months.
Cash reserves and payout capacity
The company reported that its cash reserves have reached $2.55 billion. This amount is sufficient to cover approximately 17 months of preferred share dividends and interest payments. Under the new policy, these reserves are dedicated specifically to those payments, and, unless otherwise decided by the board, the company will maintain a minimum reserve covering at least 12 months of obligations.
Saylor added that Strategy would exercise caution regarding new share issuances, especially when MSTR stock is trading at or near its 1x mNAV (modified Net Asset Value) level.
The company remains disciplined in the use of MSTR issuances, aiming to be increasingly selective, particularly when the share price is at or close to 1x mNAV.
Share performance and market reaction
The announcement arrives after a period of volatility, with MSTR shares having lost about 50% of their value since the start of the year. According to TradingView data, the price of STRC dropped to $71.25 on Friday, trading at a 28.75% discount to its face value. Last week, Zach Pandl, head of Grayscale’s research unit, argued that Strategy may need to sell $3 billion in Bitcoin to fulfill its cash obligations.
Ahead of Monday’s market open, however, investors returned to MSTR shares, lifting pre-market prices on the Nasdaq by more than 5.5%.
Bitcoin holdings remain unchanged
Strategy also confirmed that no new Bitcoin was added in the week ending Sunday, maintaining its total holdings at 847,363 BTC. The company’s cumulative Bitcoin outlay stands at $64.1 billion, with an average purchase price of $75,651. At the latest quotations, Bitcoin traded at approximately $60,018.
So far in June, the company has made a net addition of 3,625 BTC—having bought 3,657 BTC at the beginning of the month, while selling 32 BTC. Additionally, by selling 12.67 million MSTR shares, Strategy generated a net income of about $1.15 billion.
