The group is preparing a change in its dividend policy. The company wants to obtain the agreement of its shareholders to modify the payment schedule of its four preferred shares, including STRC. If the proposal passes, each calendar day will become a check-in date, with payment the following business day. This measure brings Strategy closer to a model already adopted by Strive, another bitcoin treasury company. The project comes as STRC seeks to stabilize its price after its decline in June.
In brief
- Strategy will submit to its shareholders a proposed daily dividend on four preferred shares.
- STRC would be the first security affected, with a first daily payment scheduled for November 2.
- STRF, STRK and STRD would follow in January, after formalities with Delaware.
- The project comes after the sharp drop in STRC, linked in particular to greater leverage.
Bitcoin: a new payment frequency for four preferred shares
Strategy’s board of directors approved the proposal Thursday, according to a document filed with the Securities and Exchange Commission. Shareholders will have to vote at an extraordinary general meeting on October 28. The project concerns STRC, STRF, STRK and STRD, the four titles. The modification would only concern the timing of dividends, without changing their rates or the total amount distributed.
If shareholders validate the project, each day will become a record date for dividends. The corresponding payment will be made the following business day. STRC would open this system, with a payment scheduled for November 2. The other three titles would follow in January, with first payments on January 4.
These changes would become effective upon filing with Delaware of the updated certificates governing the preferred shares. The proposed schedule creates a different frequency, without changing the rates or total amount. For holders, the evolution mainly concerns the pace of operations. Strategy places this system in a capital structure built around bitcoin cash.
Strive has already adopted daily dividends
The move comes after that of Strive, another bitcoin treasury company. Strive introduced daily dividends on its SATA preferred shares, becoming the first listed company to adopt this pace. In May, the company announced that SATA would pay dividends every business day starting June 16. The announced rate then reached 13%.
The way Strive works differs from that proposed here. Its model relies on working days to set the relevant dates. The project studied would, for its part, make each calendar day a recording date. Payment would remain scheduled for the next business day, which distinguishes the calendars.
THE data from BitcoinTreasuries.NET indicate a gap between their reserves. Strive holds 26,355 bitcoins, while Strategy holds 846,000 according to this source. Both companies follow a similar approach around bitcoin. The daily dividend project is part of an environment where preferred securities occupy a place.
STRC remains marked by its sharp drop in June
The company has developed what it calls “digital credit,” with preferred securities intended to produce income from its bitcoin treasury. STRC plays an important role in this organization. However, the title has seen strong variations this year. In June, it fell below its reference price of $100.
According to Yahoo Finance dataSTRC reached an intraday low of $71.25 on June 26. In the Coin Stories podcast, Phong Le talked about leveraging expectations. Some investors had borrowed using bitcoin as collateral to purchase STRC. This mechanism increased the pressure when the market declined.
When the price of bitcoin fell, these investors had to add collateral or sell their STRCs, according to Phong Le. This mechanism increased the pressure on the stock and contributed to the decline. The leader recognized, during a intervention at the start of the week in the podcast Coin Stories from Natalie Brunell, that the company did not expect such a level of leverage. He presented this episode as a lesson for the future.
Strategy seeks to strengthen the stability of STRC
Since this episode, the company has sought to limit the risk of a new liquidation with a reserve in US dollars. It has provided a policy allowing STRCs to be repurchased below their par value of $100. Phong Le said Strategy wants to attract more long-term investors. Institutional investors are among the targeted profiles.
This guidance comes as STRC has moved closer to the area. The stock is trading at around $98.41, with the company targeting the stock at $99 to $100. The variable dividend rate currently stands at 12%. The new schedule would not change this rate or the total amount.
The next step depends on the vote on October 28. Approval would pave the way for the new schedule, with STRC starting November 2, then STRF, STRK and STRD in January. The device will have to wait for the certificates to be filed in Delaware. In this context, Strategy combines a regular payment frequency with the desire to stabilize its securities around their value.
What happens next will therefore depend on the vote of the shareholders and the new certificates. If the schedule is validated, daily payments will mainly modify the frequency of dividends. For Strategy, this development comes after a period marked by the movements of STRC and the effects of leverage linked to bitcoin. The system will provide a framework for the four preferred shares without changing the rates.
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