Strive went out with a proposed $500 million SATS preferred offering and upsized it to $700 million in stated value. The shares priced at $90 for every $100 of stated value, raising approximately $630 million gross, with settlement scheduled for October 20. Each carries a fixed 15% annual dividend on its $100 stated amount. For a buyer at $90, that is 16.67% on the purchase price if paid in full. Across the offering, the full annual dividend comes to $105 million. That is expensive capital, and it tells you how much conviction Strive needs to make this work.
SATS sits below SATA and above Strive’s common stock. Its dividend rate is fixed, and unpaid dividends accumulate. Strive plans to set aside the equivalent of 18 months of SATS dividends at closing, which gives it some breathing room. After that, Strive is paying a substantial preferred return for capital it expects to put to better use by buying bitcoin.
For people running the leveraged-bitcoin trade themselves, the survivors of past bear markets tend to be the ones who sized their borrowing so they could live through the drawdown. My own rule of thumb is to keep borrowing at or below 20% of the value of the total stack. Even then, the actual loan terms and liquidation thresholds matter. Strive’s preferred stock does not have a bitcoin-backed margin call, but it does put a costly claim ahead of common shareholders and a meaningful drag on their bitcoin stack if they have to sell it to fund dividends.
Happy Friday.