(Aug 24): Michael Saylor’s Strategy Inc is adding a new pool of cash to its balance-sheet toolkit, part of an effort to preserve flexibility as its once-powerful financing model remains under pressure.
The company said Monday that USD Cash will sit alongside its existing reserve and can be used to buy bitcoin, fund preferred-stock dividends and debt payments, repurchase securities or meet other corporate needs. Strategy said the newly established USD Cash pool currently holds US$1.59 billion (RM6.43 billion).
The original reserve — now US$5.1 billion — may be used only to support the payment of dividends on Strategy’s preferred stock and interest on outstanding indebtedness. Any other use will require board authorisation. The initial reserve was part of a new capital management framework Strategy unveiled in June.
“The new USD Cash pool gives Strategy more time and optionality, but it does not remove those underlying obligations,” said Nicolai Sondergaard, a senior research analyst at Nansen.
Strategy’s shares and debt securities rallied last week as bitcoin ran toward US$80,000, but the financing flywheel remains impaired, with its valuation premium still well below earlier-cycle levels.
The June plan also allowed Strategy to sell bitcoin and repurchase its preferred stocks that have been traded below par. The new framework came as concern over liquidity and shareholder dilution grew amid a prolonged rout in the crypto market.
“For MSTR shareholders, the trade-off is dilution in exchange for flexibility,” Sondergaard said. “The latest equity issuance strengthened the balance sheet but did not immediately increase bitcoin-per-share exposure.”
Strategy sold about US$2 billion in common shares over the previous week. The company also repurchased US$136.4 million of its Stretch preferred shares.
Strategy hasn’t bought bitcoin since the seven days ended June 22. It didn’t buy or sell any of the cryptocurrency in the week ended yesterday, according to a filing on Monday. The company holds around US$70 billion in bitcoin.
The stock rose as much as 3% to US$122.79 in early trading. It has slumped around 66% in the past year.
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