Strategy (MicroStrategy Incorporated (NASDAQ:MSTR)) shares climbed nearly 12% on Monday after the company unveiled a new capital management framework that authorizes the potential sale of up to $1.25 billion in Bitcoin under certain conditions, while reaffirming its long-term commitment to the cryptocurrency as its primary treasury reserve asset.
The new Digital Credit Capital Framework is designed to strengthen the company's preferred securities, improve liquidity and provide greater flexibility in managing its balance sheet.
Under the framework, Strategy may sell Bitcoin to build or replenish its U.S. dollar reserve, fund preferred stock dividends and interest payments, or finance repurchases of preferred securities and common stock when management determines it is more advantageous than issuing new equity. The authorization does not require the company to sell any Bitcoin.
"Strategy remains committed to Bitcoin as its primary treasury reserve asset," Executive Chairman Michael Saylor said. "At the same time, Digital Credit requires liquidity, discipline, and active capital management."
The company also approved separate $1 billion share repurchase programs for its preferred securities and Class A common stock and increased the annual dividend rate on its STRC preferred stock to 12% beginning July 1.
Chief Executive Officer Phong Le said the framework gives Strategy greater flexibility to issue securities or repurchase them depending on market conditions, with the goal of creating long-term shareholder value.