One of the companies holding the most Bitcoin globally, Strategy has initiated a plan to repurchase its zero-coupon bonds due in 2029, with a total face value nearing $1.5 billion. According to a filing with the US Securities and Exchange Commission, the company will offer approximately $1.38 billion in cash through private negotiations to buy back these bonds. The process is expected to conclude around May 19, after which the repurchased bonds will be cancelled.
Bitcoin sales among possible funding sources
Strategy announced it could finance the buyback using a mix of cash on hand, sales of its own shares on the open market, or potential Bitcoin sales—a possibility that has drawn substantial market interest. Strategy currently stands as the largest public company holder of BTC, with around 818,869 Bitcoin on its balance sheet, amounting to a value exceeding $65 billion at latest counts.
Chairman Michael Saylor has previously stated that while the company is open to leveraging Bitcoin’s liquidity, it remains committed to being a net long-term Bitcoin buyer.
Strategy’s consideration of using Bitcoin sales to help pay down debt demonstrates just how significant its BTC holdings have become as a financial instrument.
CryptoAppsy data at the time of reporting indicated that Strategy’s Bitcoin cache reached 818,869, acquired at an average unit price of $75,537. The total amount paid for these holdings stands at $61.81 billion.
Debt restructuring and STRC share surge
The company’s bond repurchase strategy is seen as part of broader efforts to strengthen its capital structure. By buying back the 2029 bonds at an 8% discount, Strategy seeks to reduce future liabilities, though it will require a considerable near-term cash outlay.
Amid these developments, Strategy’s Series A Variable Rate Perpetual Preferred Shares (STRC) saw record trading activity, with a daily volume of $1.53 billion last Thursday. STRC offers a hefty 11.5% annual dividend yield and now boasts a market capitalization of $8.5 billion.
Trading in these shares intensified ahead of the dividend date. Meanwhile, shareholders have started a mandated voting process to decide if the currently monthly dividend payments should switch to a semi-monthly schedule. The vote concludes June 8, with first payouts under any new arrangement slated for July 15 if approved.
MSTR stock volatility following buyback news
Strategy’s shares, traded publicly as MSTR, dropped by 5.27% to $177.11 on Friday after news of the bond buyback and possible Bitcoin sales. The stock opened at $182.11, hit a high of $182.23, and bottomed at $174.34 during the day.
Recently, the company further increased its BTC holdings with the purchase of 535 additional Bitcoins for $43 million—an average price of $80,340 per Bitcoin. Sales of its shares between May 4 and 10 raised an extra $42.9 million in fresh capital. Such equity funding options help purchase more Bitcoin but can cause concerns over dilution among shareholders.
In the first quarter, Strategy reported a significant net loss, largely attributed to fluctuations in fair value accounting of its Bitcoin portfolio. The company highlighted that periodic changes in the value of its BTC assets can result in substantial swings in reported income or losses.
