Strive Initiates $1 Billion Preferred Stock Offering via ATM Facility

Financial services firm Strive has filed a new prospectus supplement, outlining a significant capital-raising initiative. The company plans to offer up to $1 billion of its Series A perpetual preferred stock through an at-the-market (ATM) equity offering program.

Offering Mechanism and Sales Agents

The offering will utilize an ATM facility, providing Strive with flexibility to sell shares incrementally over time based on market conditions and capital needs. This differs from a traditional fixed-price offering.

Strive has entered into sales agreements with a group of financial institutions to act as sales agents for the offering. These agents will receive a commission of up to 2.0% of the gross proceeds from the sales.

Key Terms of the Preferred Shares

The securities being offered are 15.00% Series A Cumulative Perpetual Preferred Shares, listed on the Nasdaq Global Market. The key financial features include:

  • Par Value & Dividend: The shares have a $100 per share par value and carry a high 15% annual cumulative dividend rate, targeting income-focused investors.
  • Dividend Security To bolster investor confidence, Strive established a dividend reserve at the time of its recent IPO closing. This reserve, funded at $22.50 per share, is designed to cover the first 18 months of dividend payments in full.
  • Market Price: Prior to the filing, the shares closed at $94.88, below their $100 liquidation preference.

Holder Protections and Company Redemption Rights

The preferred stock includes specific provisions that protect both the company and investors:

  • Company Optional Redemption: Strive reserves the right to redeem all shares under two conditions: first, if the number of outstanding shares falls below 25% of the total originally issued; second, upon a “Tax Event,” which refers to changes in tax law adversely affecting the stock's structure.
  • Holder Put Right: In the event of a “Fundamental Change” (such as a change of control or merger), holders can require the company to repurchase their shares at the $100 par value plus any accrued and unpaid dividends.

Currently, there are 7 million shares of this series outstanding. The terms for the new shares being offered will be identical to the existing ones.