```html 闪电五连鞭！Strategy自救方案正式出炉

Original Article: Odaily Planet Daily (@OdailyChina)

Author: Azuma (@azuma_eth)

Strategy, deeply embroiled in the STRC de-pegging crisis, has finally unveiled its self-rescue plan.

On the evening of June 29, Beijing time, Strategy officially announced a new plan named the "Digital Credit Capital Framework," aimed at enhancing the credit quality of its various preferred stocks (clearly referring to STRC), improving liquidity, and creating long-term value for shareholders while maintaining long-term Bitcoin exposure.

According to Strategy's disclosure, the framework consists of five major components, detailed as follows:

• Cash Reserve Position;
• STRC Dividend Policy;
• Preferred Stock Buyback Plan;
• Common Stock Buyback Plan;
• Bitcoin Monetization Plan.

Below, Odaily Planet Daily provides a detailed analysis of each of the five components of this plan (Odaily Note: Recommended reading: STRC De-pegs 11%, Can Strategy's Perpetual Motion Machine Still Turn?; If STRC Doesn't Re-peg, There's No Bitcoin Bull Run).

Cash Reserve: Two Years of Dividends Pre-funded

In this announcement, Strategy first disclosed the company's cash reserve status.

As of June 28, Strategy held approximately $2.55 billion in USD Reserves, which includes a portion of funds raised from ATM offerings not yet settled.

The key point is that Strategy has institutionalized the management of this cash for the first time. According to a new policy approved by the board, these USD reserves can only be used for two purposes moving forward: first, to pay dividends on its preferred stocks (primarily STRC); and second, to pay interest expenses on the company's existing debt. Any other use requires further board approval.

Based on Strategy's current annual preferred stock dividend and debt interest expenses of approximately $1.76 billion, the $2.55 billion cash reserve is sufficient to cover about 17.4 months. Concurrently, the company has set a hard floor: future USD reserves must not fall below the projected dividend and interest expenses for the next 12 months; otherwise, board approval would again be required.

Furthermore, Strategy has also incorporated the approved $1.25 billion BTC monetization capacity (detailed in section five below) into the liquidity support system. In total, the company currently has approximately $3.8 billion in accessible liquidity, which can cover about 25.9 months of preferred stock dividend and debt interest expenses.

Essentially, Strategy is directly addressing the market's primary concern over the past period – "whether the cash reserve can cover STRC's dividend payment obligations."

Strategy's funding sources are heavily reliant on continuous financing. If the issuance of common stocks, preferred stocks, or convertible bonds encounters obstacles, the market begins to worry about the company's ability to continue fulfilling high dividend payouts, which is a significant reason for STRC's persistent de-pegging. The current situation can be interpreted as Strategy "pre-funding" the next two years' dividends and committing not to divert these funds for other uses. For STRC holders, this adds a safety net independent of the financing market, which should help alleviate market concerns about the company's short-term solvency.

Dividend Policy: Raised to 12%, But De-pegging Doesn't Equal a Rate Hike

Another key piece of information in this announcement is the adjustment to STRC's dividend policy.

Strategy announced that starting July 1, the annualized dividend rate for STRC will be raised to 12% from its previous level. In the future, Strategy will evaluate STRC's dividend rate monthly, considering factors such as STRC's market price, market yields, credit spreads, BTC price and volatility, cash reserve coverage levels, capital market conditions, and the overall capital structure.

However, Strategy has also added a caveat, emphasizing that even if STRC falls below $100, the company may not necessarily raise the dividend. Adjusting dividends is just one of many capital management tools. The company can also stabilize the market through methods like cash reserve management, BTC monetization, preferred stock buybacks, and common stock buybacks. Therefore, it will not simply treat "de-pegging = rate hike" as a fixed formula.

Preferred Stock Buyback: Up to $1 Billion, Priority on STRC

The most critical information is here! While the first two measures are aimed at strengthening STRC's appeal through market mechanisms, the third measure marks the first time Strategy has formally introduced a tool for directly intervening in secondary market prices.

According to the announcement, Strategy has approved a Digital Credit Securities (i.e., preferred stock) buyback program of up to $1 billion, covering four preferred stock products: STRC, STRF, STRD, and STRK. Strategy explicitly stated that if management believes buybacks are accretive and beneficial for improving the capital structure, STRC will be the preferred target for repurchase.

For Strategy, this offers at least three benefits:

• Firstly, buying back discounted preferred stock is inherently a good deal. For example, when STRC trades at $90, the company can spend $90 million to retire preferred stock with a nominal value of $100 million, directly reducing the principal base for future dividend payments.
• Secondly, as the number of outstanding preferred shares decreases, the company's future annual dividend expenses will also proportionally decrease, further improving cash flow pressure and overall credit quality.
• More importantly, by becoming an actual buyer in the market, the company sends a clear signal – Strategy will not allow its digital credit products to trade at significant, prolonged discounts.

Of course, this authorization doesn't mean the company will immediately initiate buybacks. Strategy specifically emphasized that the $1 billion figure is a maximum authorization granted to management by the board, with no fixed execution period or minimum execution amount requirement. Whether buybacks are actually implemented will depend on market prices, liquidity, and management's judgment on capital allocation efficiency.

Additionally, one detail is worth noting. Strategy explicitly stated that preferred stock buybacks will not use USD reserve funds. If future BTC sales are needed to fund buybacks, they must be executed through the BTC Monetization Plan mentioned later. This means Strategy intentionally separated the uses of "securing dividend payments" from "repurchasing securities," preventing market concerns that the company might jeopardize preferred holders' payment safety for the sake of buybacks.

Common Stock Buyback: Also Up to $1 Billion, Appeasing Shareholders

Beyond preferred stocks, Strategy has also introduced a common stock (MSTR) buyback program of up to $1 billion.

Similar to the preferred stock arrangements, this authorization allows the company to repurchase MSTR shares through various methods including open market purchases, block trades, privately negotiated transactions, and accelerated share repurchases (ASR), depending on market conditions. However, compared to the preferred stock buyback's primary goal of stabilizing the digital credit system, the common stock buyback has a more direct objective – to create long-term value for common shareholders when management believes MSTR's stock price is below its intrinsic value.

This is, in fact, a very mature capital allocation strategy in capital markets. Historically, Strategy has almost always played the role of an equity issuer. Because MSTR has long enjoyed a valuation premium significantly higher than its net asset value (mNAV), the company has continuously issued common stock via ATM offerings, converting the high valuation into cash to buy more Bitcoin.

However, this logic doesn't hold forever. For the first time, Strategy explicitly stated in the announcement that the company will maintain discipline in common stock financing going forward. It will be especially cautious about issuing common stock when MSTR's mNAV approaches 1x. This means when the stock has a high premium, the company can continue issuing stock to raise funds; when the premium narrows, or the market undervalues the company, it can switch to buying back stock – in other words, Strategy aims to establish a two-way switchable capital management mechanism: raise funds when overvalued, repurchase when undervalued.

Of course, similar to the preferred stock buyback, this $1 billion authorization provides management with greater operational flexibility but doesn't mean Strategy will immediately start repurchasing shares. At the same time, Strategy has also explicitly stated that common stock buybacks will not use USD reserve funds. If future financing through BTC sales is needed for buybacks, it must also be managed within the unified BTC Monetization Plan framework.

Bitcoin Monetization Plan: Selling BTC

Clearly, this is the most controversial aspect of the entire announcement – putting it nicely is "monetization," putting it bluntly is "selling coins."

According to the announcement, the board has formally approved a BTC Monetization Program, authorizing the company to sell a portion of its BTC holdings for three main purposes:

• First, to build a USD reserve of up to $1.25 billion;
• Second, when management deems selling BTC more advantageous than issuing common stock, to pay preferred stock dividends and debt interest, or to replenish the USD reserve;
• Third, to provide funding for preferred and common stock buybacks, including related taxes and transaction costs.

Strategy also emphasized that this authorization does not mean BTC will definitely be sold. Any sale will still comprehensively consider factors such as market environment, liquidity needs, tax and accounting implications, and long-term shareholder value.

Nevertheless, this is a noteworthy change. Over the past few years, Michael Saylor has repeatedly emphasized Strategy's long-term holding philosophy, and the market has generally viewed the company as the ultimate "only-buy-never-sell" whale. Consequently, the market has long assumed that Strategy's sole source of cash was continuously issuing stocks, preferred shares, and convertible bonds, then using the proceeds to buy more BTC.

Earlier this month, Strategy sold a portion of its BTC holdings for the first time, but the scale was minimal at just 32 coins, officially cited as a "proactive market desensitization test." However, this new announcement means selling BTC has been formally integrated into the company's capital management toolkit.

Nevertheless, Strategy still emphasizes BTC's status as a "core reserve asset." BTC monetization is more of a liquidity management tool than a trading strategy. In other words, the company isn't preparing to profit from buying low and selling high, but rather adding a new funding source when financing costs are too high, market conditions are unfavorable, or when buybacks or replenishing cash reserves offer better value.

From a capital allocation perspective, this choice isn't necessarily bad and might even be more rational. Of course, for the market, this change signifies a long-held perception needing adjustment. In the past, investors almost assumed Strategy would continuously buy BTC, making it one of the most important marginal buyers in the Bitcoin market. In the future, while the company still holds long-term BTC accumulation as a core strategy, the BTC on its balance sheet will no longer be solely "reserve assets never to be sold," but will become a strategic asset that can participate in capital management under specific conditions.

Market Reaction: BTC Steady, MSTR and STRC Surge

Following the announcement of Strategy's plan, Bitcoin didn't experience significant volatility. It briefly edged higher before quickly retracing to its original position, currently oscillating around $60,000.

On Strategy's side, its common stock MSTR and preferred stock STRC both saw significant pre-market surges. As of 21:00 Beijing time tonight, MSTR was trading pre-market at $86.74, up 5.38%; STRC was at $80.9, up 8.49%.

Clearly, the market holds relatively positive expectations for Strategy's self-rescue plan. While confirming the sale of more BTC will inevitably attract controversy, the current de-pegging of STRC and its impact on Strategy's business model is a more pressing issue, and arguably more important than maintaining the "diamond hands" persona.

Going forward, the market's true focus will be on whether this capital management framework can effectively help STRC return to par value and successfully reopen Strategy's financing cycle.