Strategy, nearly 70% of cash evaporated... ultimately paid $2 billion to clear debt

▲ Michael Saylor, Bitcoin (BTC), Strategy / ChatGPT generated image

As Strategy used most of its cash reserves to discount repurchase convertible bonds maturing in 2029, market attention is shifting from resuming Bitcoin purchases to debt reduction and cash defense.

According to crypto media outlet BeInCrypto on May 26 (local time), Strategy repurchased $1.5 billion in zero-coupon convertible bonds due in 2029 for $1.38 billion. This effectively settled the debt at a discount of approximately 8% off the face value. With this repurchase, the company's dollar reserves decreased from approximately $2 billion to $871 million.

Strategy finalized the transaction through private negotiations from May 11 to May 25. The company saved approximately $120 million in repayment costs through this repurchase, and the total outstanding convertible bond balance decreased from $8.2 billion to $6.7 billion. BeInCrypto also reported that the risk of future stock dilution, which could occur if the stock price rises above the conversion price of $672, has also decreased.

This debt repurchase is notable as it signals a change in Strategy's capital management approach, which has long been symbolized by Bitcoin (BTC) purchases. The company stated that this transaction generated an additional 0.7% Bitcoin yield and explained that a 'Bitcoin profit' of 4,391 BTC was generated through the discount effect.

Phong Le, CEO of Strategy, stated, “We repaid $1.5 billion in convertible bonds with $1.38 billion in cash. We achieved a Bitcoin yield of 13.3% year-to-date.” Andrew Kang, CFO, explained that the company plans to rebuild its reserves by combining equity, credit, and digital capital instruments.

Strategy did not purchase additional Bitcoin last week, when this transaction was finalized. However, between May 11 and May 25, it acquired 24,869 BTC using funds from the issuance of STRC preferred stock and MSTR common stock. Currently, Strategy's Bitcoin holdings are tallied at 843,738 BTC.

BeInCrypto analyzed that since Strategy still holds $6.7 billion in convertible bonds, the next financing method will be a signal to determine whether the discount repurchase strategy will be repeated. This decision to temporarily halt Bitcoin purchases is seen as a move prioritizing financial structure reorganization over aggressive accumulation.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*