DeFi Development Corp. has set the terms for its planned offering of Variable Rate Series C Perpetual Preferred Stock, known as CHAD Stock, at $9 per share. The offering is expected to generate $19.8 million in gross proceeds, with the company potentially raising more if the underwriter exercises its additional-share option.
- 2.2 million CHAD shares priced at $9 each, targeting $19.8 million in gross proceeds.
- The underwriter can purchase another 330,000 shares, potentially lifting proceeds to $22.77 million.
- CHAD carries an initial 13% dividend rate based on its $10 stated value.
- The first dividend payment is scheduled for Oct. 1.
- Proceeds may support SOL purchases, digital assets, working capital, and strategic investments.
DeFi Development Sets Final CHAD Offering Terms
DeFi Development Corp., which has built a substantial Solana-focused treasury, has finalized the initial terms of its CHAD preferred stock offering.
The company plans to issue 2.2 million shares at $9 each, resulting in approximately $19.8 million of gross proceeds before underwriting fees and other expenses.
The updated terms provide more detail than the company’s Aug. 31 announcement, which had outlined a potential offering of up to $20 million without specifying the final number of shares or their offering price.
R.F. Lafferty & Co. is serving as the sole book-running manager. The underwriter also received a 30-day option to purchase an additional 330,000 shares at the offering price, less applicable commissions.
If the option is fully exercised, the offering would expand to 2.53 million shares and generate as much as $22.77 million in gross proceeds.
CHAD Starts With a 13% Dividend Rate
Each CHAD share has a stated value and initial liquidation preference of $10, although investors in the offering will purchase the shares for $9.
The preferred stock will initially carry a 13% annual dividend rate calculated against the $10 stated value. At that rate, each share would generate $1.30 in annual dividends if the rate remained unchanged.
Because investors are paying $9 per share, the initial dividend represents an effective annual yield of approximately 14.44% based on the starting rate.
That figure should not be interpreted as a guaranteed long-term return. The dividend rate is variable and can be adjusted by DeFi Development’s board.
Dividend Rate Can Change
The company expects to review the CHAD dividend rate at least monthly.
Future adjustments may consider factors such as prevailing interest rates, CHAD’s market price, comparable securities, liquidity requirements, and other financial conditions.
The prospectus limits monthly reductions to 50 basis points from the previous month’s rate, although the company cautions that the dividend could eventually fall below yields available on comparable securities.
The first dividend is scheduled for Oct. 1 and will cover the period from issuance through Sept. 30.
Afterward, dividends are expected to become payable on business days when they are declared by the board and when legally available funds exist.
Company Plans $2.86M Initial Dividend Reserve
DeFi Development also plans to establish a dedicated dividend account when the offering closes.
The company intends to allocate $1.30 for every CHAD share issued to the reserve. Based on the planned 2.2 million shares, the initial account would contain approximately $2.86 million.
That amount represents roughly one year of dividend payments calculated at the initial 13% rate.
The reserve is expected to be funded using existing cash, financial instruments, or digital assets rather than relying exclusively on the proceeds from the CHAD offering.
However, the prospectus does not require the company to increase the reserve if the dividend rate rises above 13% or if additional CHAD shares are issued.
The reserve also does not constitute a separate guarantee for investors. Assets held in the account could remain accessible to creditors in certain insolvency or bankruptcy situations.
CHAD Has No Maturity Date
CHAD is structured as a perpetual preferred security, meaning it has no scheduled maturity date.
Investors generally cannot demand repayment except under specified corporate circumstances. The preferred shares also have limited voting rights and rank behind the company’s existing and future debt obligations.
Following a Nasdaq listing, DeFi Development may have the ability to redeem CHAD at $11 per share, plus accumulated and unpaid dividends, subject to the conditions outlined in the prospectus.
Additional redemption provisions may apply following certain tax-related events or if the number of outstanding CHAD shares falls below specified thresholds.
Proceeds Could Support Additional SOL Purchases
The company has indicated that the net proceeds could be used for several corporate purposes.
Potential uses include:
- Purchasing Solana (SOL)
- Other digital asset investments
- Working capital
- Acquisitions
- Strategic transactions
- General corporate purposes
Importantly, DeFi Development has not committed to allocating a specific portion of the $19.8 million to SOL.
Consequently, the entire offering should not be interpreted as a confirmed $19.8 million Solana purchase.
The company recently acquired approximately 19,000 SOL at an average price of $98.14, bringing its reported treasury to roughly 2.33 million SOL and SOL-equivalent assets.
The company has not provided a current detailed breakdown showing how much of that total consists of native SOL versus liquid-staking assets and other SOL-linked holdings.
SOL Treasury Remains Exposed to Market Volatility
DeFi Development stakes assets through both its own validators and external validator infrastructure, generating potential network rewards and fees.
However, the company’s increasing exposure to Solana also creates significant cryptocurrency market risk.
The prospectus specifically warns that any offering proceeds invested in SOL would remain subject to digital-asset price volatility.
Management also retains broad discretion over how the funds are ultimately deployed, meaning actual allocations could differ from the company’s current plans.
CHAD Seeks Nasdaq Listing
DeFi Development has applied to list CHAD on the Nasdaq Capital Market under the ticker CHAD.
Trading is expected to begin following the initial issuance if Nasdaq approves the listing. Until that approval and the completion of the offering, there is no guarantee that CHAD will begin trading as planned.
The company is also considering an at-the-market program that could allow it to sell additional CHAD shares following the listing.
Future issuance could affect existing shareholders by increasing the supply of the preferred security and potentially influencing its market price.
DFDV Shares Rise Ahead of the Offering
DeFi Development’s common shares, traded under DFDV, closed Aug. 31 at approximately $5.38, representing a gain of about 7.8% during the regular trading session.
However, the CHAD announcement was released at 5:45 p.m. Eastern Time, after the regular market had closed. Therefore, the day’s DFDV performance cannot be directly attributed to the final CHAD offering terms.
The stock opened around $4.90 and traded between approximately $4.84 and $5.52 during the session.
A clearer market reaction to the finalized preferred-stock terms will only become visible once U.S. markets reopen.
Key Dates Ahead
The immediate milestones for DeFi Development include the closing of the CHAD offering, Nasdaq’s decision on the listing, and the first scheduled dividend payment on Oct. 1.
Any additional purchase of SOL using offering proceeds would need to be separately disclosed before it can be considered completed.
The CHAD offering gives DeFi Development another financing mechanism as it expands its Solana-focused treasury strategy. With a 13% initial dividend rate, potential Nasdaq trading, and proceeds that could be directed toward digital assets, the security adds a new layer to the company’s increasingly crypto-centric capital structure.
