How are dividends on the preferred stock paid?

Cumulative dividends accrue at 8.00% per annum on the liquidation preference and are payable quarterly on March 31, June 30, September 30 and December 31, beginning March 31, 2025, when, as and if declared. Strategy may pay in cash, Class A Common Stock, or both. Stock payments are valued at 95% of the daily VWAP and are capped by a $119.03 initial floor price, with any shortfall paid in cash to the extent legally permitted.

What happens if dividends are not paid?

Unpaid dividends compound quarterly at the 8.00% rate. In certain cases of unpaid accumulated dividends, Strategy is prohibited from declaring or paying dividends on, or repurchasing, Class A or Class B Common Stock or other junior securities. If four or eight consecutive payments are not paid in full, preferred holders gain the right to elect one or more directors.

How can holders convert the preferred stock and at what price?

Holders may convert some or all shares on any business day, subject to certain limitations, into Class A Common Stock at an initial rate of 0.1000 shares per preferred share, equal to an initial conversion price of $1,000.00 per Class A share, subject to customary anti-dilution adjustments.

Under what circumstances can Strategy redeem the preferred stock?

Strategy may redeem all, and not less than all, of the preferred stock for cash if total outstanding liquidation preference falls below 25% of the amount issued in the offering, or if a Tax Event occurs. The Optional Redemption price is the liquidation preference plus accumulated unpaid dividends. The Tax Redemption price is the greater of the liquidation preference and the five-day average of last sale prices, plus accumulated unpaid dividends.

Strategy 8-K: Shareholder Matters & Corporate Changes

Q: What security did Strategy issue on February 5, 2025?

Strategy issued 7,300,000 shares of its 8.00% Series A Perpetual Strike Preferred Stock in a public offering registered under the Securities Act of 1933, with a $100 liquidation preference per share.

01—Abstract

Summary

Summary of the 8-K filed February 5, 2025. Cited figures are marked; the original filing is the authoritative source.

On February 5, 2025, MicroStrategy Incorporated d/b/a Strategy ("Strategy") issued 7,300,000 shares of a new class of capital stock, the "8.00%^a Series A Perpetual Strike Preferred Stock," in a public offering registered under the Securities Act of 1933.

Each share has a par value of $0.001^b and a liquidation preference of $100. The preferred stock ranks senior to the Class A and Class B common stock on dividends and on distribution of assets in liquidation, but is junior to all existing and future indebtedness, structurally junior to the liabilities of subsidiaries, and subject to any other preferred stock then outstanding. The preferred accrues cumulative dividends at 8.00% per annum on the liquidation preference, payable when, as and if declared, quarterly on March 31, June 30, September 30 and December 31, beginning March 31, 2025.

Strategy may pay declared dividends in cash, in Class A Common Stock, or in a combination. Stock-settled dividends are valued at 95% of the daily VWAP and capped by a floor price initially set at $119.03^c per share, with any shortfall to be paid in cash to the extent legally permitted. Unpaid dividends compound quarterly.

If dividends are not fully paid, Strategy is prohibited from declaring or paying dividends on or repurchasing common or other junior stock in certain cases. Holders may convert on any business day at an initial rate of 0.1000 Class A share per preferred share, implying an initial conversion price of $1,000.00^d per Class A share. Strategy may redeem all preferred stock for cash if outstanding liquidation preference falls below 25% of the amount issued in the offering, or upon a "Tax Event," and holders may require repurchase upon a "Fundamental Change." If four or eight consecutive dividend payments are missed in full, preferred holders gain the right to elect one director, or additional directors, respectively.

The preferred has limited class voting rights and does not vote on an as-converted basis with common stock. The filing also incorporates these terms into Item 5.03 and lists the Certificate of Designations and related exhibits.

02—Key points

Key Highlights

Issued 7,300,000 shares of 8.00% Series A Perpetual Strike Preferred Stock in a public offering registered under the Securities Act of 1933.
Each preferred share has a $100 liquidation preference and $0.001 par value.
Preferred ranks senior to Class A and Class B common stock on dividends and liquidation, but junior to all existing and future indebtedness and to subsidiary liabilities.
Cumulative dividends accrue at 8.00% per annum, payable quarterly when declared, in cash, Class A Common Stock, or a combination, with unpaid amounts compounding quarterly.
Stock-settled dividends are subject to a floor price initially of $119.03 per share, with any shortfall payable in cash where legally permitted.
Initial conversion rate of 0.1000 Class A share per preferred share, equal to an initial conversion price of $1,000.00 per Class A share.
Strategy may redeem all preferred for cash if outstanding liquidation preference falls below 25% of the original offering amount or upon a Tax Event; holders may require repurchase on a Fundamental Change.

03—Questions

Frequently Asked Questions

What security did Strategy issue on February 5, 2025?
Strategy issued 7,300,000 shares of its 8.00% Series A Perpetual Strike Preferred Stock in a public offering registered under the Securities Act of 1933, with a $100 liquidation preference per share.
How are dividends on the preferred stock paid?
Cumulative dividends accrue at 8.00% per annum on the liquidation preference and are payable quarterly on March 31, June 30, September 30 and December 31, beginning March 31, 2025, when, as and if declared. Strategy may pay in cash, Class A Common Stock, or both. Stock payments are valued at 95% of the daily VWAP and are capped by a $119.03 initial floor price, with any shortfall paid in cash to the extent legally permitted.
What happens if dividends are not paid?
Unpaid dividends compound quarterly at the 8.00% rate. In certain cases of unpaid accumulated dividends, Strategy is prohibited from declaring or paying dividends on, or repurchasing, Class A or Class B Common Stock or other junior securities. If four or eight consecutive payments are not paid in full, preferred holders gain the right to elect one or more directors.
How can holders convert the preferred stock and at what price?
Holders may convert some or all shares on any business day, subject to certain limitations, into Class A Common Stock at an initial rate of 0.1000 shares per preferred share, equal to an initial conversion price of $1,000.00 per Class A share, subject to customary anti-dilution adjustments.
Under what circumstances can Strategy redeem the preferred stock?
Strategy may redeem all, and not less than all, of the preferred stock for cash if total outstanding liquidation preference falls below 25% of the amount issued in the offering, or if a Tax Event occurs. The Optional Redemption price is the liquidation preference plus accumulated unpaid dividends. The Tax Redemption price is the greater of the liquidation preference and the five-day average of last sale prices, plus accumulated unpaid dividends.

04—Continue

← View all 8-K filings