01—Abstract
Summary
Summary of the 8-K filed March 18, 2025. Cited figures are marked; the original filing is the authoritative source.
On March 18, 2025, MicroStrategy Incorporated d/b/a Strategy (the "Company") filed a Form 8-K under Item 8.01 (Other Events) to announce that, subject to market and other conditions, it intends to offer 5,000,000 shares of its Series A Perpetual Strife Preferred Stock in a public offering registered under the Securities Act of 1933.
The press release attached as Exhibit 99.1 states that the Company intends to use the net proceeds for general corporate purposes, including the acquisition of bitcoin and for working capital. Morgan Stanley, Barclays, Citigroup and Moelis are joint book-running managers for the offering. The preferred stock is described as accumulating cumulative dividends at a fixed rate of 10.00%a per annum on its stated amount, with regular dividends payable quarterly in arrears when, as and if declared by the board, beginning June 30, 2025, and payable solely in cash.
If a regular dividend is not paid on its payment date, compounded dividends accrue quarterly, starting at 10% plus 100 basis points and increasing by 100 basis points per subsequent dividend period, up to a maximum rate of 18% per annum. The initial liquidation preference is $100b per share, subject to a daily adjustment mechanism tied to sale prices and trading averages of the preferred stock. The Company may redeem all, but not all, of the preferred stock for cash if shares outstanding fall below 25% of the total originally issued across offerings, or upon certain tax events.
Holders have a right to require repurchase at the stated amount plus accumulated unpaid dividends upon a "fundamental change" as defined in the certificate of designations. The Company also states that neither the 8-K nor the press release constitutes an offer to sell or a solicitation of an offer to buy any securities.
02—Key points
Key Highlights
- Proposed public offering of 5,000,000 shares of Series A Perpetual Strife Preferred Stock, subject to market and other conditions
- Stated 10.00% fixed cumulative dividend rate per annum on the stated amount, with quarterly regular dividends payable solely in cash beginning June 30, 2025
- Unpaid dividends compound quarterly, starting at 10% plus 100 basis points and rising by 100 basis points per subsequent period, up to a maximum of 18% per annum
- Initial liquidation preference of $100 per share, with a daily adjustment based on sale prices and ten-day trading averages of the preferred stock
- Net proceeds intended for general corporate purposes, including the acquisition of bitcoin and working capital
- Company may redeem all shares for cash if outstanding shares fall below 25% of the total originally issued, or upon certain tax events
- Holders may require repurchase at the stated amount plus unpaid dividends upon a defined fundamental change
03—Questions
Frequently Asked Questions
What is the Company offering and how large is the offering?
The Company announced its intent to offer 5,000,000 shares of its Series A Perpetual Strife Preferred Stock in a public offering registered under the Securities Act of 1933, subject to market and other conditions.
What dividend terms apply to the preferred stock?
The preferred stock accumulates cumulative dividends at a fixed rate of 10.00% per annum on the stated amount. Regular dividends are payable quarterly in arrears on March 31, June 30, September 30 and December 31, beginning June 30, 2025, when, as and if declared by the board, and are payable solely in cash. Unpaid regular dividends compound quarterly at 10% plus 100 basis points, increasing by 100 basis points per subsequent period up to a maximum of 18% per annum.
How will the Company use the proceeds?
The Company intends to use the net proceeds for general corporate purposes, including the acquisition of bitcoin and for working capital.
Under what circumstances can the Company redeem the preferred stock?
The Company may redeem all, but not less than all, of the preferred stock for cash at any time if outstanding shares are less than 25% of the total originally issued in this and any future offerings, taken together. It may also redeem all shares if certain tax events occur. The redemption price equals the liquidation preference as of the business day before the redemption notice is sent, plus accumulated and unpaid regular dividends.
What protections do holders have if a fundamental change occurs?
If a fundamental change, as defined in the certificate of designations, occurs, holders may require the Company to repurchase some or all of their shares at a cash price equal to the stated amount plus accumulated and unpaid regular dividends to, but excluding, the repurchase date.
04—Continue