Strive has announced plans to raise up to $150 million through a follow-on offering of its Variable Rate Series A Perpetual Preferred Stock, referred to as SATA Stock, contingent on market conditions.
This offering is registered under the Securities Act of 1933 and represents Strive’s latest initiative to enhance its bitcoin holdings while simultaneously addressing outstanding debt obligations.
The proceeds from this offering, combined with existing cash reserves and potentially funds derived from the termination of certain derivative contracts related to convertible debt, will be allocated to repurchasing or redeeming all or a portion of the 4.25% Convertible Senior Notes due 2030, issued by Strive’s subsidiary, Semler Scientific, Inc.
These Convertible Notes, which are guaranteed by Strive, were originally issued under an indenture with U.S. Bank Trust Company, National Association acting as trustee.
Strive’s Intent to Acquire Additional Bitcoin
Strive may also utilize the funds to reduce Semler Scientific’s borrowings under its agreements with Coinbase Credit Inc., acquire further bitcoin and related products, and address general corporate requirements.
Moreover, Strive is in negotiations with certain holders of the Semler Convertible Notes regarding a potential exchange of their notes for shares of SATA Stock.
SATA Stock is designed as a variable-rate, cumulative dividend security with a stated value of $100 per share. Currently, dividends are set at an annualized rate of 12.25%, payable on a monthly basis, although Strive retains the discretion to adjust this rate within specified parameters.
In the event that a dividend payment is missed, it accrues additional compounded interest, which can accumulate at a rate of up to 20% per annum. The company aims to manage the dividend rate to maintain the stock price within a target range of $95 to $105 per share.
Strive also reserves the right to redeem SATA Stock at $110 per share (or higher at its discretion), in addition to any accrued dividends. Redemption may occur at any time; however, the company generally cannot redeem less than $50 million of SATA Stock unless under specific circumstances related to clean-up or tax-related redemptions.
The liquidation preference for SATA Stock is established at $100 per share, adjusted daily to reflect the greater of the stated value, the closing price from the previous trading day, or the 10-day average price.
Strive stated that Barclays and Cantor will serve as joint book-running managers for the offering, with Clear Street acting as a co-manager.
Following a brief peak of SATA at $100 today, the company’s strategy to establish a follow-on offering price based on prevailing market conditions is viewed as a favorable alternative to an “at-the-market” (ATM) offering, effectively avoiding dilution and allowing Strive to benefit from advantageous pricing.
The funds raised will assist the company in retiring legacy convertible debt and expanding its Bitcoin holdings, further reaffirming its commitment to a growth strategy centered on cryptocurrency.
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