Strategy disclosed that the Board had adopted a new capital management framework with a core component of up to $2 billion in buy-back authorizations and an arrangement for the future sale of bitcoin. According to the company, the mechanism was designed to increase balance sheet flexibility while maintaining Bitcoin as a reserve asset for major treasury.
Repurchase amount in two parts
According to the disclosure, the repurchase authorization was divided into two categories: up to $1 billion for the repurchase of priority securities and up to $1 billion for the repurchase of general A shares. Neither plan had a fixed maturity date and the company had no commitment to implement it, and subsequent repurchases would depend on market conditions and management judgement.
Strategy states that if management believes that repurchases can increase shareholder value, the plans can be initiated and that at the same time these arrangements can be modified, suspended or terminated.
Bitcoin can be sold if needed.
At the same time, the company approved a “bitcoin realization plan”. Under this arrangement, management may sell a portion of the BTC, if it deems it appropriate, and the funds may be used to replenish or rebuild the United States dollar reserve, to pay priority share dividends and interest, or to repurchase shares.
Strategy stressed that the scheme provided only operating space and did not mean that the company had to sell bitcoin. Bitcoin is still considered to be the dominant treasury reserve asset.
United States dollar reserve approximately US$ 25.50 billion
The company disclosed that its board had adopted a United States dollar reserve policy, which currently stood at approximately $255.0 billion. This size is sufficient to cover, by company calibre, about 17.4 months of priority share dividends and interest expenditure.
At the same time, Strategy increased the annualized dividends of STRC, the variable interest rate A series, to 12 per cent, for the red cycle starting on 1 July.
- Priority securities buy-back authorization: up to $1 billion
- A. General share buyback authority: up to $1 billion
- Current United States dollar reserve: approximately US$ 25.50 billion
Management stated that capital structures would be managed more proactively
According to Executive Director Michael Saylor, the objective of the new framework is to enhance Strategy ' s credit position while maintaining Bitcoin ' s central position in the company ' s treasury. CEO Phong Le, for his part, stated that the company was moving from acting as a financier to managing its capital structure more proactively, using both issue and buy-back tools, depending on market conditions.
After the news was released, Strategy ' s pre-board share price increased by about 6 per cent and STRC by about 9 per cent. Bitcoin prices also rose slightly to about $6.05 million.
Additional information:According to the company, in addition to replenishing the United States dollar reserves, the income from the realization of bitcoin can be used directly to pay for priority share dividends and interest, indicating that it is integrating the Bitcoin Treasury more closely with capital liability management.