Michael Saylor built a Bitcoin treasury empire on the back of creative capital markets. Now some of the investors who funded that empire are sitting across the table from bankers, trying to figure out how to get out.
Distressed-debt funds are in active negotiations to swap Strategy’s preferred shares for alternative securities, according to people familiar with the discussions. The talks signal a meaningful shift in how sophisticated investors view the risk profile of Strategy Inc., the company formerly known as MicroStrategy.
How a creative funding machine hit a wall
Strategy has issued more than $10B in perpetual preferred equity, making it one of the more unusual capital structures in public markets today. The pitch was simple: buy preferred shares, collect a steady dividend, and gain indirect exposure to Bitcoin’s upside through the company’s treasury holdings.
The series drawing the most attention is STRC, Strategy’s Stretch Variable Rate Perpetual Preferred Equity. These shares were issued at a $100 par value. They’ve been trading in the $85 to $90 range, a discount steep enough to push effective yields as high as 13.6%, well above the stated dividend rate of around 11.5%.
