DeFi Development Corp. has completed an $11m preferred stock offering and plans to use substantially all of the net proceeds to buy more Solana (SOL) for its corporate treasury.
The Nasdaq-listed company raised approximately $10.3m after underwriting discounts, commissions and estimated expenses from the sale of 1.375 million shares of its Variable Rate Series C Perpetual Preferred Stock.
The shares, traded on the Nasdaq Capital Market under the ticker CHAD, were priced at $8 each and carry a stated value of $10. They have an initial annual dividend rate of 13%.
DeFi Development said the funds would be used for general corporate purposes, including working capital, SOL purchases and strategic initiatives. However, the company said it expects to direct substantially all of the net proceeds towards acquiring additional SOL.
The closing on 8 September was smaller than the terms outlined earlier in the month. The original proposal involved 2.2 million shares at $9 each, which would have produced gross proceeds of $19.8m. That earlier plan also included a possible overallotment of 330,000 shares.
Under the completed transaction, the underwriter received a 30-day option to buy a further 206,250 shares at the final offering price. R.F. Lafferty & Co. was the sole book-running manager.
DeFi Development’s final release said Fundstrat co-founder Tom Lee took part in the offering alongside other investors. Lee is also chairman of Ethereum treasury company BitMine Immersion Technologies.
The company describes CHAD as the first SOL-backed “Digital Credit” instrument. That is DeFi Development’s description rather than a distinct regulatory classification: in legal terms, CHAD is publicly traded preferred equity issued by a US company.
Dividend terms and investor priority
Although CHAD has an initial 13% dividend rate based on its $10 stated value, investors paid $8 per share. That gives the initial effective yield of about 16.25%.
The rate is not guaranteed. Dividends are payable only “when, as and if declared” by DeFi Development’s board and when legally available funds exist. The board can review the rate monthly or more frequently, although any single reduction cannot exceed 50 basis points.
Management said the variable rate was intended to help support CHAD’s market price within a longer-term range of $9.95 to $11. That remains a forward-looking objective and does not ensure the shares will reach or stay near their $10 stated value.
The company has established a reserve covering 12 months of dividends at the initial 13% rate. It deposited $1.30 for each issued share into a separate account, using existing cash, financial instruments or digital assets.
The first dividend is scheduled for 1 October and will cover the period from the issue date through 30 September. Investors recorded as shareholders at the close of business on 30 September will qualify. Subject to board approval, subsequent dividends are intended to be distributed on each business day.
CHAD is perpetual, with no scheduled maturity date, and non-convertible. Its holders cannot exchange the preferred shares for DFDV common stock.
Preferred shareholders rank ahead of common shareholders for dividend payments and distributions in a liquidation. They rank behind DeFi Development’s existing and future debt, however, and are structurally junior to liabilities held by the company’s subsidiaries.
After its Nasdaq listing, DeFi Development may redeem CHAD at $11 per share, in addition to accumulated and unpaid dividends. It may also redeem all outstanding shares after certain tax events or if the number of CHAD shares falls below 25% of all shares issued in current and future offerings.
Because the preferred shares cannot be converted into common stock, the offering did not increase DFDV’s common share count. DeFi Development therefore expects the transaction to raise the amount of SOL held per common share once the funds are invested.
That result has not yet been established. It will depend on the quantity of SOL purchased, transaction expenses, the market price of SOL and changes in the company’s fully converted share count.
Solana holdings and staking income
Before the CHAD offering closed, DeFi Development held approximately 2.33 million SOL and SOL-equivalent assets. The company bought about 19,000 SOL in August at an average price of $98.14, as previously reported when its treasury reached that level.
The 2.33 million figure includes SOL equivalents. DeFi Development has not provided a current breakdown showing how much is native SOL, liquid staking tokens or other SOL-denominated holdings.
Unlike Bitcoin, SOL can generate staking rewards. DeFi Development operates validator infrastructure and also delegates tokens to external validators. Its management believes those returns could help support CHAD’s preferred dividends and the company’s wider earnings.
Staking income remains variable and is not guaranteed. Returns depend on factors including network inflation, validator performance, the amount of delegated stake, fees and SOL’s value against the US dollar.
DFDV common shares closed at $5.99 on 8 September, an increase of about 2%. SOL was trading near $104 on 9 September. There is no verified evidence directly linking either market movement to the completion of the CHAD offering.
The next scheduled date is 30 September, when the shareholder record will be established for the first dividend. The payment is due on 1 October. DeFi Development also plans to publish updated figures for its SOL holdings and its SOL-per-share measure after deploying the offering proceeds.
