Strategy cuts cash reserve 61% to repurchase $1.5B notes

Strategy repurchased $1.5 billion of convertible notes for about $1.38 billion in cash, drawing down the dedicated reserve it created in December and reducing the cash set aside for dividends and debt service from $2.25 billion to $871 million.

The Tysons Corner, Virginia-based company said the repurchase extinguished $1.5 billion of convertible paper and left its full holding of 843,738 bitcoin unchanged.

After the transaction, roughly $6.7 billion of convertible debt remains outstanding. Those instruments can convert into Strategy common shares under specified conditions, and some holders have the option to sell back a portion of their holdings as early as September 2027.

Strategy’s variable-rate preferred stock, Stretch (STRC), carries an 11.5% annual dividend paid monthly and has a market capitalization around $10.4 billion. Internal company metrics indicate that the dividend rate corresponds to about $1.71 billion in annual obligations.

CFO Andrew Kang wrote in a statement that the company intends to rebuild the cash reserve over time. He said the company plans to replenish the reserve through a mix of Digital Capital, Digital Credit and Digital Equity sales depending on market conditions.

Executive Chairman Michael Saylor described the transactions as illustrating the ‘optionability’ of Strategy’s capital structure and offering ‘multiple levers to optimize our balance sheet and respond to market conditions.’

Company leaders had recently signaled they could use the full scope of available resources to manage the convertible debt load, including the possibility of selling bitcoin. A prediction market priced a 71% chance Strategy would sell bitcoin this year, down from 85% a week earlier.

Strategy’s common shares rose about 3.7% to $166 shortly after Tuesday’s opening bell and have gained roughly 8.8% year-to-date. Bitcoin traded near $77,200, down about 12% for the year; the company’s bitcoin holdings are valued at approximately $64.7 billion at current prices.

Broader crypto-product flows showed mixed demand: bitcoin and ethereum exchange-traded funds recorded $112 million in combined outflows on Monday, while newer Hyperliquid-linked ETFs logged an eighth consecutive day of net buying.