ASSTs preferred equity blueprint for MSTR’s convertible debt
Strive is using perpetual preferred equity to retire convertible debt, potentially setting a blueprint for MicroStrategy's large overhang.Summary
Strive (ASST), a bitcoin treasury and asset management company, is employing perpetual preferred equity, specifically its Variable Rate Series A Perpetual Preferred Stock (SATA), to retire existing convertible debt obligations, such as Semler Scientific's notes. This strategy involves exchanging fixed maturity obligations for perpetual preferreds that carry a variable dividend (currently 12.25%) and lack a maturity or conversion feature, thereby improving reported leverage metrics as the preferred shares are treated as equity rather than debt.
This restructuring offers a potential framework for Strategy (MSTR), which faces an $8.3 billion convertible notes overhang. By converting debt into perpetual preferreds, Strive allows bondholders to trade equity conversion optionality for a higher-yielding, perpetual, and liquid instrument senior to common stock.
The move could provide executive chairman Michael Saylor with an alternative method to mitigate future maturity risk associated with MSTR's substantial convertible notes, especially those with distant put dates and conversion prices significantly above current trading levels.
(Source：CoinDesk)