Metaplanet Raises $135 Million to Expand Bitcoin Treasury Strategy
In a significant financial maneuver, Metaplanet Ltd., a Tokyo-based company, has successfully approved the issuance of perpetual preferred shares worth approximately $135 million. This strategic move aims to bolster its corporate treasury in Bitcoin amidst a highly volatile market landscape.
Details of the Capital Raise
The company’s board of directors sanctioned the issuance of 23.61 million class B preferred shares on November 20, targeting institutional investors from abroad. The net proceeds are projected to be around ¥20.41 billion ($130 million) after expenses, with payments anticipated on December 29, pending shareholder approval on December 22.
These preferred shares, branded “MERCURY” (Metaplanet Convertible for Return and Yield), feature a fixed dividend rate of 4.9% and a conversion price set at ¥1,000 per share. Each share entitles holders to annual dividends of ¥12.25 ($0.08), paid out quarterly, although the initial period ending December 31 will distribute only ¥0.40 ($0.003) per share.
With the conversion price significantly above Metaplanet’s closing price of ¥375 ($2.40) on November 19, concerns about short-term dilution appear minimal. Vice President Simon Gerovich emphasized that this structure aims to “minimize dilution from common stock issuances while continuing to grow Bitcoin holdings,” indicating a pivotal step in Metaplanet’s Bitcoin treasury strategy.
Saylor’s Advocacy for Bitcoin Treasury Models
In related developments, Michael Saylor, the founder and executive chairman of Strategy, reaffirmed his confidence in Bitcoin treasury models during a November 14 interview with CNBC. He addressed market volatility concerns, asserting that Strategy could withstand an 80% to 90% market downturn while continuing operations, thanks to a modest leverage ratio of 1.15 and long-term debt maturities averaging 4.5 years.
Saylor pointed to Bitcoin’s historical performance, which has averaged annual returns of 50% over the past five years despite various downturns. He highlighted that Strategy’s five-year performance, at 71%, has surpassed giants like Nvidia, claiming that no S&P 500 firm has matched its returns.
However, Strategy faces potential exclusion from the MSCI USA and Nasdaq 100 indices due to a proposal to remove companies with digital assets comprising more than 50% of total assets. JPMorgan estimates that this could trigger passive outflows of up to $2.8 billion, with decisions expected by January 15.
Despite a decline of over 60% from its November 2024 peak, Strategy’s stock remains up more than 1,300% since it began acquiring Bitcoin in August 2020.
Bitcoin Treasury Companies Facing Market Pressures
The wider Bitcoin treasury sector is navigating what Coinbase Research describes as a “player-versus-player” environment. Premiums relative to net asset value have compressed significantly, reducing from 3.76 times in April to 2.8 times, while corporate Bitcoin adoption has plummeted by 95% since July. Out of 168 listed treasury firms, 26 are currently trading below the value of their digital assets.
Metaplanet was among the first major companies to trade consistently below its Bitcoin reserves, propelling its capital restructuring efforts. The firm aims to limit the issuance of preferred shares to 25% of its Bitcoin asset value to strengthen its credibility in the preferred equity market while expanding its cash reserves.
Continuing its aggressive accumulation strategy, Metaplanet purchased 8,178 Bitcoin this week at an average price of $102,171, bringing its total holdings to 649,870 BTC. Saylor maintains that Bitcoin will continue to outperform traditional assets, dubbing it “digital capital” suitable for long-term investors.
