Strive Asset Management proposed a perpetual preferred-equity structure that would convert time-bound convertible notes into a permanent equity instrument. The move targets an estimated $8.3 billion convertible-debt overhang at Strategy and seeks to replace episodic refinancing risk with a predictable dividend obligation.
The proposal, modeled on Strive’s Variable Rate Series A Perpetual Preferred Stock (SATA), which carries a 12.25% variable dividend, reframes the trade-off between refinancing pressure and ongoing cash dividends. That shift could materially change Strategy’s leverage profile and cash-flow planning.
Strive’s approach converts or substitutes convertible notes into perpetual preferred stock that is treated as equity rather than debt. According to market reporting, the plan removes principal repayment obligations tied to fixed maturities and replaces them with continuous dividend payments, reducing cyclical refinancing needs and smoothing liquidity demands.
For Strategy, the mechanics directly address its largest convertible tranche—about $3 billion—with a put option in June 2028 and a conversion price of $672.40. Because that conversion price sat well above Strategy’s share price around 2026-01-26, the tranche represented both refinancing risk and potential market-dependent conversion outcomes.
Reclassifying such instruments as perpetual equity would lower reported debt ratios and reduce the episodic pressure of maturing notes.
Strive challenges, trade-offs and stakeholder reactions
Perpetual preferred equity typically demands a higher yield than conventional debt; Strive’s own SATA carries a 12.25% variable dividend, a level that implies a persistent cash outflow. That ongoing dividend could divert cash away from Strategy’s stated objective of increasing Bitcoin per share unless it is carefully sized against expected treasury activity.
Convincing existing convertible-holders to accept a perpetual instrument poses another hurdle. Holders of the $3 billion tranche invested with the expectation of equity upside tied to Strategy’s Bitcoin holdings and stock performance.
Swapping them into a yield-bearing, non-convertible preferred instrument will likely require compensation—either a yield premium or other structural incentives—to offset foregone upsideStrive itself moved down this path earlier: reporters noted the firm announced plans in early 2025 and executed follow-on actions in late 2025/early 2026, including using proceeds from its preferred issuance to buy Bitcoin.
Those steps served as the practical template for the blueprint proposed for Strategy.
For the market, the net effect depends on pricing and scale. If the perpetual yield is calibrated low enough to preserve cash for Bitcoin accumulation, the company gains stability. If yields are high, the perpetual dividend could crowd out treasury purchases and pressure common-share valuation.
Investors will watch two clear markers: how convertible-holders respond to any exchange proposal and the looming June 2028 put on the $3.0 billion tranche, which will test whether a preferred-equity swap can materially reduce refinancing risk without imposing an unsustainable dividend burden.
The outcome will influence not only Strategy’s balance sheet but also how other crypto-heavy corporates manage large, time-bound debt overhangs.
