Key Insights
- Metaplanet announced MERCURY, a Class B perpetual preferred equity instrument raising approximately $150 million through third-party allotment to institutional investors.
- The company structured MERCURY with a 4.9% fixed dividend and ¥1,000 conversion option, positioning it junior to MARS preferred shares but senior to common stock.
- Metaplanet launched the offering as its mNAV traded at 0.877, below the critical 1.0 threshold that typically signals market concerns about the sustainability of Bitcoin treasury companies.
Metaplanet disclosed on November 20 the issuance of 23.61 million MERCURY shares at ¥900 per share, generating approximately ¥21.25 billion in gross proceeds.
The company positioned the instrument as a pre-IPO financing round, with payments scheduled for December 29.
MERCURY represented Metaplanet’s second layer in a restructured capital stack that placed MARS senior preferred shares above it and common stock below.
The instrument carried a 4.9% fixed cumulative dividend calculated on a ¥1,000 notional value, translating to roughly $7-8 million in total annual dividend obligations.
Preferred Equity Structure and Capital Hierarchy
Preferred equity sits between debt and common stock in a company’s capital structure. These instruments carry fixed dividend payments like bonds but lack maturity dates like equity, creating a hybrid profile.
Metaplanet structured MERCURY as perpetual, meaning the company faced no obligation to redeem the shares at a predetermined time.
The conversion feature embedded in MERCURY allowed holders to convert their preferred shares into common stock at ¥1,000 per share.
At Metaplanet’s current trading price of approximately ¥387, with an implied net asset value per share around ¥403 when Bitcoin traded near $91,800, the conversion option remained deeply out of the money.
Based on the linear relationship between Bitcoin price and mNAV per share, conversion would become economically viable between $110,000 and $230,000.
Also, it would depend on whether the stock traded at mNAV or commanded a premium. MERCURY holders received priority dividends quarterly but held no voting rights.
The instrument sat junior to MARS in liquidation preference but senior to common shareholders.
Timing Concerns and mNAV Threshold Breach
Metaplanet executed the MERCURY offering while its mNAV traded at 0.877, substantially below the 1 benchmark.
The metric calculated the company’s enterprise value relative to its Bitcoin holdings, accounting for both market capitalization and outstanding debt obligations.
An mNAV below 1.0 signaled that markets valued Metaplanet’s stock at a discount to its underlying Bitcoin treasury.
Investors effectively paid less for shares than the proportional value of the Bitcoin backing them.
This created a structural problem: issuing new equity at a discount to NAV diluted existing shareholders’ Bitcoin-per-share ownership.
When a company raises capital below mNAV, each dollar of proceeds bought less Bitcoin than the Bitcoin-per-share that existing holders already owned.
This made equity issuances anti-accretive, eroding shareholder value. The preferred structure partially addressed this concern by avoiding immediate common stock dilution, but the 4.9% dividend obligation added fixed costs.
Sustained trading below 1 mNAV is unsustainable for Bitcoin treasury companies. The discount prevents efficient capital raises, as selling stock or equity-linked instruments below NAV destroys value.
Metaplanet’s October breach of the 1.0 threshold marked the first time the company traded at a discount since launching its Bitcoin treasury strategy in 2024.
Debt and Liquidation Thresholds
Metaplanet held approximately 30,823 Bitcoin worth roughly $3.3-3.5 billion at recent prices.
Against this treasury, the company carried about $117 million in zero-percent ordinary bonds and had drawn $100 million from a $500 million Bitcoin-collateralized credit facility.
Total debt linked to the Bitcoin strategy stood at approximately $217 million, with a loan-to-value ratio of 6-7%.
The low LTV provided a substantial cushion against downside Bitcoin price moves. Analysis suggested the current structure remained viable even if Bitcoin fell to approximately $30,000, which would push LTV into the mid-20s percentage range.
Genuine stress would only emerge if Bitcoin crashed into the low-$20,000 range or below, where the debt load would exceed one-third of asset value.
The more significant risk emerged from path-dependent scenarios in which Metaplanet drew the full $500 million credit facility near a Bitcoin peak, only to suffer an 80% drawdown.
Drawing at $150,000 Bitcoin, followed by a crash to $30,000, would push LTV to dangerous levels, necessitating forced selling.
MERCURY’s Risk Profile Versus Credit Facilities
Unlike the Bitcoin-backed loan, MERCURY introduced neither a hard liquidation price nor a margin call mechanism.
The perpetual structure meant that missing dividend payments did not trigger the same default events as bond or loan covenant breaches.
However, the instrument added approximately $7 million to $8 million in annual fixed costs due to its 4.9% coupon.
As long as Metaplanet’s Bitcoin holdings appreciated faster than this carrying cost over complete market cycles, the preferred equity functioned as cheap leverage.
However, layering MERCURY on top of existing bonds and the credit facility increased the company’s total fixed obligations.
The conversion feature created a soft dilution event rather than a margin call. Between roughly $115,000 and $225,000 prices for Bitcoin, the ¥1,000 conversion price would come into play.
Conversion would add approximately 23.6 million shares to the existing base of roughly 1.14 billion, creating about 2% dilution for common shareholders.
Bear Market Risks for Digital Asset Treasuries
The broader Bitcoin treasury company landscape faced mounting pressure as market conditions deteriorated.
As of November 2025, approximately 15% of the 228 publicly traded companies operating digital asset treasuries traded below 1 mNAV.
Strategy, the largest holder with over 640,000 Bitcoin, saw its mNAV fall to 0.93. A sustained bear market posed existential challenges for this business model.
Companies trading at discounts to NAV could not efficiently raise capital through equity issuances without destroying shareholder value. The reflexive nature of the strategy worked in reverse during downturns.
Bitcoin treasury companies that aggressively accumulated during cycle peaks using debt and equity-linked instruments faced the most acute risks.
If Bitcoin executes a typical 70-80% drawdown from elevated levels, companies with high leverage ratios would confront forced deleveraging through Bitcoin sales.
Metaplanet’s modest current leverage provided insulation against near-term stress. T
The company’s 6-7% LTV meant it could withstand substantial Bitcoin price compression without immediate balance sheet threats.
MERCURY’s perpetual structure and lack of margin requirements further reduced acute liquidation risks compared to traditional debt instruments.
The strategic concern centered on path dependence. If Metaplanet continues layering preferred equity, bonds, and credit facility draws while Bitcoin rallies, the subsequent bear market would test the accumulated fixed costs and leverage.