Strive's 13% Dividend Rate Sparks Liquidation Fears

Strive, a Bitcoin treasury company, is facing financial pressure due to its perpetual preferred equity, SATA. As of June 30, Strive had $782.95 million in stated amount and approximately $783 million of aggregate liquidation preference from SATA shares outstanding.

The company's board has maintained the variable dividend rate at 13% for periods beginning on or after August 1. This implies that Strive will have to pay out around $101.8 million in annualized dividends, which is a significant burden considering its current cash reserves of $154.9 million.

This means that Strive has only about 18.3 months' worth of cash coverage, excluding operating needs and other factors. The company can reset the SATA rate, but reductions are subject to certain conditions, including a SOFR-linked floor.