UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE
TO
(Amendment
No. 3)
TENDER
OFFER STATEMENT UNDER SECTION 14(d)(1) or 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
Osprey
Bitcoin Trust
(Name of Subject Company (Issuer) and Filing Person (Offeror))
Common
Units of Fractional Undivided Beneficial Interest
(Title of Class of Securities)
68839C206
(CUSIP Number of Class of Securities)
Gregory
D. King
Osprey
Funds, LLC, as Sponsor of Osprey Bitcoin Trust
1241 Post Road, 2nd Floor
Fairfield,
CT 06824
(914) 214-4697
(Name, address and telephone number of person authorized to receive notices and communications on behalf of filing person)
Copy
to:
Erin
E. Martin, Esq.
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue, NW
Washington,
DC 20004
(202)
739-3000
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Check the box if filing relates
solely to preliminary communications made before the commencement of a tender offer. |
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Check the appropriate boxes
below to designate any transactions to which the statement relates: |
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third-party tender offer subject to Rule 14d-1. |
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issuer tender offer
subject to Rule 13e-4. |
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going-private transaction subject to Rule 13e-3. |
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amendment to Schedule 13D under Rule 13d-2. |
Check
the following box if the filing is a final amendment reporting the results of the tender offer: ☐
Introductory
Statement
This
Amendment No. 3 (“Amendment No. 3”) amends and supplements the Tender Offer Statement (the “Tender Offer Statement”)
on Schedule TO originally filed with the Securities and Exchange Commission (the “SEC”) by Osprey Bitcoin Trust, a Delaware
Statutory Trust (the “Trust”), on January 11, 2024 (the “Original Schedule TO”), as amended and supplemented
by the Amendment No. 1 to the Tender Offer Statement, filed with the SEC on January 16, 2024 (“Amendment No. 1)” and the
Amendment No. 2 to the Tender Offer Statement, filed with the SEC on January 23, 2024 (“Amendment No. 2” and together with
the Original Schedule TO, Amendment No. 1 and this Amendment No. 3, the “Schedule TO”) in connection with the offer to purchase
up to 20% or 1,668,107 outstanding common units of fractional undivided beneficial interest in the Trust (the “Units”) at
net asset value.
The
Trust’s tender offer (the “Offer”) is being made upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated January 11, 2024, and previously filed as Exhibit (a)(1)(i) to the Original Schedule TO (the “Original Offer
to Purchase”), as amended hereby on January 26, 2024 and as filed herewith as Exhibit (a)(1)(vii) to this Amendment No. 3 (as amended,
the “Amended Offer to Purchase” and together with the Original Offer to Purchase, the “Offer to Purchase”), the
related Letter of Transmittal, dated January 11, 2024, and previously filed as Exhibit (a)(1)(ii) to the Original Schedule TO, and other
related materials as may be amended or supplemented from time to time.
This
Amendment No. 3 is being filed to amend and supplement the Original Schedule TO and in accordance with Rule 13e-4(c)(2) under the Securities
Exchange Act of 1934, as amended, and should be read in conjunction with the Original Schedule TO, Amendment No. 1 and Amendment No.
2. Except as amended hereby to the extent specifically provided herein, all terms of the Offer and all other disclosures set forth in
the Original Schedule TO, Amendment No. 1, Amendment No. 2 and the exhibits thereto remain unchanged and are hereby expressly incorporated
into this Amendment No. 3 by reference. Capitalized terms used and not otherwise defined in this Amendment No. 3 shall have the meanings
assigned to such terms in the Original Schedule TO and the Offer to Purchase.
The
Schedule TO is hereby amended and supplemented as follows:
Item
1 through Item 11
Item
1 through Item 11 of the Schedule TO are hereby amended and supplemented as set forth below:
“All
descriptions and references in respect of the ‘Offer to Purchase’ in the Original Schedule TO are hereby amended to refer
to the ‘Amended Offer to Purchase.’ Accordingly, all references in the Original Schedule TO to the ‘Offer to Purchase’
are hereby amended and replaced with ‘Amended Offer to Purchase.’”
Item
12. Exhibits.
Item 12 of the Schedule TO is hereby amended and supplemented by adding the following exhibit and to update the Exhibit Index accordingly:
SIGNATURE
After
due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete
and correct.
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Osprey Funds, LLC as Sponsor of Osprey Bitcoin Trust |
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By: |
/s/
Gregory D. King |
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Gregory
D. King |
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Chief
Executive Officer |
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| Date: |
January
26, 2024 |
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Exhibit
(a)(1)(vii)
Offer
to Purchase
OSPREY
BITCOIN TRUST
1241
POST ROAD, 2ND FLOOR
FAIRFIELD,
CONNECTICUT 06824
OFFER
TO PURCHASE for cash UP TO 20% or 1,668,107 OUTSTANDING
Common
units of fractional undivided BenEficial INTEREST AT NET ASSET VALUE
minus
fees payable to the sponsor
DATED
January 11, 2024, AS AMENDED ON JANUARY 26, 2024
THE
OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT THE END OF THE DAY
ON
FRIDAY, February 9, 2024, AT 12:00 MIDNIGHT, NEW YORK CITY TIME, UNLESS THE OFFER IS EXTENDED Or EARLIER terminated (such date and time,
as they may be extended, the “expiration date”)
If
you do not want to sell your Units at this time, please disregard this offer to
purchase referred to below.
To
the Investors of Osprey Bitcoin Trust:
Osprey
Bitcoin Trust, a Delaware statutory trust (the “Trust” or “we”), is offering to purchase on the terms and conditions
set forth in this offer to purchase (the “Offer to Purchase”) and the related Letter of Transmittal (together with any amendments
or supplements thereto, the “Letter of Transmittal”) and other related materials as may be amended or supplemented
from time to time (collectively, with this Offer to Purchase and Letter of Transmittal, the “Offer”) up to 20% or 1,668,107
outstanding Units (the “Offer Amount”) pursuant to tenders by investors at a purchase price equal to their net asset value
(“NAV”), less applicable fees payable to the Sponsor (as defined below) (such purchase price, the “Purchase Price”),
as of the close of business on February 14, 2024 (such date, as may be extended, the “Valuation Date”). As used in this Offer,
the term “Unit,” or “Units,” as the context requires, shall refer to the common units of fractional undivided
beneficial interest in the Trust and portions thereof representing beneficial interest in the Trust, and “you” shall refer
to investors in the Trust. If the Trust elects to extend the tender period for any reason beyond February 14, 2024, for the purpose of
determining the Purchase Price for tendered Units, the NAV of such Units will be determined at the close of business on the third (3rd)
Business Day (as defined below) after the date on which the tender offer actually expires. The Trust reserves the right to adjust the
date on which the NAV of the Units will be determined to correspond with any extension of the Offer, provided that any such extension
of the Offer and any such corresponding adjustment to the Valuation Date, as applicable, will be announced via press release as promptly
as practicable after such determination has been made and not later than 9:00 a.m., New York City time, on the first (1st)
Business Day after the previously scheduled Expiration Date. This Offer is being made to all investors of the Trust and is not conditioned
on any minimum amount of Units being tendered, but is subject to certain conditions described below. Units are quoted on the OTC Market
Group’s OTCQX® Best Marketplace (“OTCQX”) under the ticker symbol, “OBTC.” They are not traded on any
national exchange.
Investors
should realize that the NAV of the Trust (and therefore the NAV of the Units held by each investor) likely will change between January
10, 2024 (the date immediately preceding the commencement of this Offer), January 25, 2024 (the most recent date as of which NAV is available) and February 14, 2024, when the NAV of the Units tendered to the
Trust will be determined for purposes of calculating the Purchase Price of such Units. Tendering investors should also note that although
the tender offer expires on February 9, 2024, they remain investors in the Trust until February 14, 2024, when the NAV of their Units
is calculated. The Trust’s NAV is calculated on each Business Day and is equal to the aggregate value of the Trust’s assets
less its liabilities (which include accrued but unpaid fees and expenses, both estimated and finally determined), based on the fair market
value price for Bitcoin, reflecting the execution price of Bitcoin on its principal market as determined by Lukka Inc., an independent
third party digital asset data company. The Sponsor, which supervises and manages the day-to-day operations of the Trust and will
receive a fee of two (2) percent of NAV per Unit to be repurchased hereby in part to offset expenses incurred in administering the Offer,
calculates NAV per Unit of the Trust daily, which equals the NAV of the Trust divided by the number of outstanding Units. The Sponsor
calculates the Trust’s NAV per Unit as of 4:00 p.m., New York City time on each day that the New York Stock Exchange is open for
trading (each, a “Business Day”), and publishes the NAV per Unit on the Trust’s website (www.ospreyfunds.io) shortly
thereafter. Any tendering investors that wish to obtain the most current NAV of their Units on this basis should refer to www.ospreyfunds.io.
This website address, however, is not intended to function as a hyperlink, and the information contained on or accessible through such
website is not incorporated by reference in this Offer to Purchase and does not form part of the Offer.
Investors
desiring to tender their Units in the Trust in accordance with the terms of the Offer should complete and sign the enclosed Letter of
Transmittal (returning the form at the end of the Letter of Transmittal will suffice) and mail or fax it to the Trust’s transfer
agent and the depositary for the Offer, Continental Stock Transfer and Trust Company (“CSTT”), in the manner set forth below.
Investors holding Units in a brokerage account or otherwise through a broker, dealer, commercial bank, trust company or other nominee
must contact their broker, dealer, commercial bank, trust company or other nominee in order to tender their Units. Investors who wish
to tender their Units but cannot comply with the procedures for book-entry transfer by the Expiration Date or other required documents
cannot be delivered by the Expiration Date may be able to still tender their Units if they comply with the guaranteed delivery
procedures described in Section 4.
IMPORTANT
Neither
the Trust, nor Osprey Funds, LLC, a Delaware limited liability company and the sponsor of the Trust (the “Sponsor”), nor
any of the executive officers of the Sponsor, nor Morrow Sodali LLC (the “Information Agent”) nor CSTT makes any recommendation
to any investor as to whether to tender or refrain from tendering Units. Investors must make their own decisions whether to tender Units,
and, if so, the portion of their Units to tender.
Because
each investor’s investment decision is a personal one, based on its financial circumstances, no person has been authorized to make
any recommendation on behalf of the Trust as to whether investors should tender Units pursuant to the Offer. No person has been authorized
to give any information or to make any representations in connection with the Offer other than those contained herein or in the Letter
of Transmittal. If given or made, such recommendation and such information and representations must not be relied on as having been authorized
by the Trust.
This
transaction has not been approved or disapproved by the Securities and Exchange Commission (the “SEC”) nor has the SEC or
any state securities commission passed on the fairness or merits of such transaction or on the accuracy or adequacy of the information
contained in this document, the Letter of Transmittal or any related documents. Any representation to the contrary is unlawful.
Questions
and requests for assistance and requests for additional copies of the Offer may be directed to the Information Agent.
The
Information Agent for the Offer is:
Morrow
Sodali LLC
333
Ludlow Street, 5th Floor, South Tower
Stamford,
CT 06902
Individuals
call toll-free (800) 662-5200
Banks
and brokers call (203) 658-9400
Email:
OBTC.info@investor.morrowsodali.com
TABLE
OF CONTENTS
| 1. |
Background
and Purpose of the Offer |
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| 2. |
Offer
to Purchase and Price |
6 |
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| 3. |
Amount
of Tender |
7 |
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| 4. |
Procedure
for Tenders |
7 |
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| 5. |
Withdrawal
Rights |
9 |
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| 6. |
Purchases
and Payment |
9 |
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| 7. |
Certain
Conditions of the Offer |
10 |
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| 8. |
Certain
Information About the Trust |
11 |
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| 9. |
Interests
of Executive Officers of the Sponsor |
13 |
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| 10. |
Certain
U.S. Federal Income Tax Consequences |
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| 11. |
Accounting
Treatment |
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| 12. |
Disclosure Provisions |
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| 13. |
Fees
and Expenses |
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| 14. |
Miscellaneous |
14 |
Summary
Term Sheet
THIS
SUMMARY HIGHLIGHTS CERTAIN INFORMATION IN THIS OFFER TO PURCHASE. TO UNDERSTAND THE OFFER FULLY AND FOR A MORE COMPLETE DESCRIPTION OF
THE TERMS OF THE OFFER, YOU SHOULD CAREFULLY READ THIS ENTIRE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL. WE HAVE INCLUDED
SECTION REFERENCES PARENTHETICALLY TO DIRECT YOU TO A MORE COMPLETE DESCRIPTION IN THE OFFER TO PURCHASE OF THE TOPICS IN THIS SUMMARY.
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Who
is offering to purchase my securities? |
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The
issuer of the Units, Osprey Bitcoin Trust (the “Trust”), a Delaware statutory trust, is offering to purchase your securities. |
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What
and how many securities is the Trust offering to purchase? (See Section 2, “Offer to
Purchase and Price” and Section 3, “Amount of Tender”) |
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We will buy up to 20% or 1,668,107
(the “Offer Amount”) of our outstanding common units of fractional undivided beneficial interest (“Units”).
If the number of Units properly tendered and not properly withdrawn prior to the date and time the Offer expires is less than or
equal to the Offer Amount, we will, upon the terms and subject to the conditions of the Offer, purchase all Units tendered. If more
Units than the Offer Amount are properly tendered and not properly withdrawn prior to the date the Offer expires, we will purchase
the Offer Amount on a pro rata basis, with appropriate adjustment to avoid purchases of fractional Units. You may tender all of your
Units or a portion of your Units, but you cannot be assured that all of your tendered Units will be repurchased. |
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How
much and in what form will the Trust pay me for my Units? (See Section 2, “Offer to Purchase and Price”) |
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We
will pay cash for Units purchased pursuant to the Offer at their net asset value, or “NAV” (that is, the value of the
Trust’s assets minus its liabilities, multiplied by the proportionate interest in the Trust you desire to sell), less applicable
fees payable to Osprey Funds, LLC, the sponsor of the Trust (the “Sponsor”) (such purchase price, the “Purchase
Price”). The Purchase Price will be calculated as of the close of business on February 14, 2024 (such date, as it may be extended,
the “Valuation Date”). As of January 10, 2024, the Trust’s NAV was $15.20 per Unit and as of January 25, 2024, the Trust’s NAV was $13.10 per Unit. Of course, the NAV
can change every Business Day. You can obtain current NAV quotations on the Trust’s website (www.ospreyfunds.io). This website
address, however, is not intended to function as a hyperlink, and the information contained on or accessible through such website
is not incorporated by reference in this Offer to Purchase and does not form part of the Offer. |
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What
is the purpose of the Offer? (See Section 1, “Background and Purpose of the Offer”) |
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The purpose of
the Offer is to provide liquidity to investors who hold Units. The Sponsor has the discretion to determine whether the Trust will
repurchase Units from investors from time to time pursuant to written tenders. Because Units of the Trust have traded at an average
discount to NAV of 25% over the past year, and because of the limited liquidity on the OTCQX, the Sponsor has determined, after
consideration of these and various additional matters, that the Offer provides an opportunity to provide liquidity to
investors of the Trust. If they so elect, by tendering through the Offer all or a portion of their Units, investors may receive a
return of some or all of their investment in the Trust at a price that is reflective of the NAV per Unit of the Trust less the fee
payable to the Sponsor of two (2) percent of NAV per Unit rather than the trading price of the Units on the OTCQX, which have traded at prices that do not correlate to NAV per Unit.
The
Sponsor, which supervises and manages the day-to-day operations of the Trust and will receive a fee of two (2) percent of NAV per Unit
to be repurchased hereby in part to offset expenses incurred in administering the Offer, has approved the Offer. |
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When
does the Offer expire? (See Section 2, “Offer to Purchase and Price”) |
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This
Offer will remain open until the end of the day on February 9, 2024, at 12:00 midnight, New York City time, unless extended or earlier
terminated in accordance with the terms and subject to the conditions of the Offer, subject to applicable law (such date and time,
as they may be extended, the “Expiration Date”). |
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Can
the Offer be extended, amended or terminated, and if so, under what circumstances? (See Section 5, “Withdrawal Rights”
and Section 7, “Certain Conditions of the Offer”) |
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Please
note that just as you have the right to withdraw your Units, we have the right, subject to the conditions described in Section 7,
to extend, amend or terminate this Offer at any time before the end of the day on the Expiration Date. Also realize that although
the Offer expires on February 9, 2024, tendering investors remain investors in the Trust until February 14, 2024, when the NAV of
their Units is calculated. If we extend the Offer, you may withdraw your Units until the Expiration Date, as extended. |
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If
we extend the Expiration Date for the Offer, we will delay the acceptance of any Units that have been tendered. If we extend the
Offer, for the purpose of determining the Purchase Price for tendered Units, the NAV of such Units will be determined at the close
of business on the third (3rd) Business Day after the date on which the tender offer actually expires.
We can also terminate the Offer under certain circumstances, as provided in Section 7 of this Offer to Purchase, and subject to applicable
law. |
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How
will I be notified if you extend the Offer or amend the terms of the Offer? (See Section 7, “Certain Conditions of the
Offer”) |
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If
we extend the Offer, we will make a public announcement via press release of such extension and corresponding adjustment to the Valuation
Date as promptly as practicable after such determination has been made and not later than 9:00 a.m., New York City time, on the first
(1st) Business Day after the previously scheduled Expiration Date. We will announce any amendment to the terms of the
Offer by making a public announcement via press release and filing with the SEC a corresponding amendment to our Issuer Tender Offer
Statement on Schedule TO. |
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Will
I have to pay any fees or commissions on Units I tender? (See Section 2, “Offer to Purchase and Price” and Section 6,
“Purchases and Payment”) |
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The
Trust will impose a fee of two (2) percent of NAV on repurchases of Units in the Trust, which fee will be payable to the Sponsor
in part to offset expenses incurred administering the Offer, including processing of tender forms, effecting payment, postage and
handling. |
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Does
the Trust have the financial resources to pay me for my Units, and when will I be paid? (See
Section 6, “Purchases and Payment”) |
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If
the Trust repurchased the total Offer Amount at their NAV of $15.20 per Unit as of January
10, 2024, the cost of reimbursing the tendering investors would be approximately $25,356,076, and if the Trust repurchased the total Offer Amount at their NAV of $13.10 per Unit as of January 25, 2024, the cost of reimbursing
the tendering investors would be approximately $21,846,916.
Repurchases of Units by the Trust will be paid as promptly as practicable after the applicable
Valuation Date and the guaranteed delivery period. |
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The
Trust intends to sell Bitcoin to pay for Units tendered and no alternative financing plans or arrangements for the transaction
are currently contemplated. The Trust expects that full payment of the amounts tendered will be made promptly following the applicable
Valuation Date. |
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Are
there any conditions to the Offer? (See Section 7, “Certain Conditions of the
Offer”) |
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Yes.
The Trust may terminate the Offer, amend the Offer or postpone the acceptance of tenders made pursuant to the Offer, in each case
with prompt notice to investors, if in the Sponsor’s reasonable judgment and regardless of the circumstances giving rise to
such event or events (other than any deliberate action or inaction by the Sponsor or the Trust), certain conditions have not been
satisfied or waived on or prior to the Expiration Date. Subject to the preceding sentence, our obligation to accept for payment
and pay for your tendered Units depends upon a number of conditions that include, but are not limited to, the following: |
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The
Trust will be able to sell Bitcoin in an orderly manner in light of existing market conditions and such liquidation would not have
a material adverse effect on the NAV of the Trust to the detriment of non-tendering unitholders such that completion of
the Offer would be impractical or inadvisable; |
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No
legal action or proceeding instituted or threatened that challenges the Offer or otherwise would have a material adverse effect on
the Trust; |
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No
declaration of a cryptocurrency, banking or similar moratorium by federal or state authorities or any suspension of
payment by banks in the United States or New York State that is material to the Trust; |
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No
limitation imposed by federal or state authorities on the extension of credit by lending institutions; |
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No
suspension of trading by any dealer the Trust uses as a counterparty for Bitcoin purchases and sales, no unilateral refusal by
any such counterparty to trade with the Trust for any reason and no technical difficulties experienced by any such counterparty that
would prohibit or materially hinder its ability to trade in Bitcoin; |
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No
commencement of war, armed hostilities or other international or national calamity directly or indirectly the United States that
is reasonably likely to materially and adversely affect the Trust, the Units or the Trust’s ability to complete the
Offer; |
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No
other event or condition that would have a material adverse effect on the Trust or its investors if Units tendered pursuant to the
Offer were purchased; and |
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Effecting
the transaction would not, in the opinion of legal counsel, constitute a breach of the Sponsor’s fiduciary duties of
loyalty and care owed to the Trust or unitholders or the fiduciary duties and standards set forth in the Trust Agreement (as
defined in Section 8 herein). |
Our
Offer is not conditioned on any minimum amount of Units being tendered and is not subject to a financing condition.
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How
do I tender my Units? (See Section 4, “Procedure for Tenders”) |
If
you desire to tender all or part of your Units, you must do one of the following prior to the Expiration Date:
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1. |
(a)
if you hold book-entry Units registered in your own name with CSTT, our transfer agent and share registrar (such holder, a “registered
unitholder”), you must complete and sign the Letter of Transmittal in accordance with the instructions to the Letter of Transmittal,
have your signature on the Letter of Transmittal guaranteed if Instruction 1 to the Letter of Transmittal so requires, and mail or
deliver the Letter of Transmittal, together with any other required documents, to CSTT at one of its addresses shown on the Letter
of Transmittal. You should also validly complete Form W-9 or appropriate Form W-8, as applicable included in the Letter of Transmittal
to ensure no backup withholding on any payments made to you pursuant to the Offer; or |
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(b)
if you are an institution participating in The Depository Trust Company (“DTC,” and such institution, a “DTC participant”)
and desire to tender Units held in book-entry form through the facilities of DTC, you must tender all such Units you desire to tender
through DTC. You must electronically transmit your acceptance of the Offer through DTC’s Automated Tender Offer Program (“ATOP”),
for which the transaction will be eligible. In accordance with ATOP procedures, DTC will then verify the acceptance of the Offer
and send an agent’s message (as hereinafter defined) to CSTT for its acceptance. An “agent’s message” is
a message transmitted by DTC, received by CSTT and forming part of the book-entry confirmation, which states that DTC has received
an express acknowledgment from you that you have received the Offer and agree to be bound by the terms of the Offer, and that the
Company may enforce such agreement against you. Alternatively, you may also confirm your acceptance of the Offer by delivering to
CSTT a duly executed Letter of Transmittal. |
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A
tender will be deemed to have been received only when CSTT receives either (i) as to registered shareholders, a properly completed
Letter of Transmittal and all other documents required by the Letter of Transmittal; or (ii) as to DTC participants, (I) either a
duly completed agent’s message through the facilities of DTC at CSTT’S DTC account or a properly completed Letter of
Transmittal, and (II) confirmation of book-entry transfer of the Units into CSTT’s applicable DTC account; or |
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2. |
if
you have Units registered in the name of a broker, dealer, commercial bank, trust company or other nominee, you must contact the nominee
if you desire to tender those Units and request that your broker, dealer, commercial bank, trust company or other nominee effects the
transaction for you. If a broker, dealer, commercial bank, trust company or other nominee holds your shares, it is likely that they
will have a deadline prior to the Expiration Time for you to act to instruct them to accept the Offer on your behalf. We urge you to
contact your broker, dealer, commercial bank, trust company or other nominee to find out their deadline. |
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Until
what time can I withdraw tendered Units, and how can I do so? (See Section 5, “Withdrawal Rights”) |
Our
Offer remains open to you until the end of the day on the Expiration Date. Until this time, you have the right to change your mind and
withdraw your Units from consideration for purchase. In addition, after the Offer expires, you may withdraw your tendered Units if the
Trust has not yet accepted your tendered Units for payment by March 11, 2024.
If
you desire to withdraw tendered Units, you should either:
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Give
proper written notice to CSTT; OR |
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If
your Units are held of record in the name of a broker, dealer, commercial bank, trust company or other nominee, contact that firm
or other entity to withdraw your tendered Units. |
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What
is the accounting treatment of the Offer? |
The purchase of Units pursuant
to the Offer will result in a reduction of the Trust’s net assets in an amount equal to the aggregate Purchase Price, with a corresponding
increase in liabilities payable to redeeming unitholders. The two (2) percent redemption fees will be recorded as an expense with a corresponding
increase in liabilities payable to the Sponsor. Once the Bitcoin held in the Trust is converted to cash, the value of the investment
in Bitcoin will decrease by approximately the aggregate NAV of the redeeming units, with a corresponding increase in cash. After the
payments to the redeeming unitholders and the Sponsor are issued, the total cash will decrease for the aggregate NAV of the redeeming
units with the corresponding extinguishing of the liabilities.
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Following
the Offer, will the Trust continue as a public company? |
Yes.
The completion of the Offer in accordance with its terms and conditions will not cause the Trust to stop being subject to the periodic
reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We also do not expect the
Offer to cause our common stock to cease to be quoted on the OTCQX. As of January 10, 2024, the Trust had approximately 8,500
holders of record of Units based on information provided by our transfer agent and by DTC.
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Whom
should I contact with questions about the Offer? |
The
Information Agent can help answer your questions. The information agent is Morrow Sodali LLC and the contact information is set out below:
Morrow
Sodali LLC
333
Ludlow Street, 5th Floor, South Tower
Stamford,
CT 06902
Individuals
call toll-free (800) 662-5200
Banks
and brokers call (203) 658-9400
Email:
OBTC.info@investor.morrowsodali.com
THE
OFFER
1. Background
and Purpose of the Offer. The purpose of the Offer is to provide liquidity to investors who hold Units. The Sponsor has the
discretion to determine whether the Trust will repurchase Units from investors from time to time pursuant to written tenders.
Because Units of the Trust have traded at an average discount to NAV of 25% over the past year, and because of the limited liquidity
on the OTCQX, the Sponsor has determined, after consideration of these and various additional matters, that the Offer provides an
opportunity to provide liquidity to investors of the Trust. If they so elect, by tendering through the Offer all or a portion of
their Units, investors may receive a return of some or all of their investment in the Trust at a price that is reflective of the NAV
per Unit of the Trust less the fee payable to the Sponsor of two (2) percent of NAV per Unit rather than the trading price of the
Units on the OTCQX, which have traded at prices that do not correlate to NAV per Unit. The Sponsor,
which supervises and manages the day-to-day operations of the Trust and will receive a fee of two (2) percent of NAV per Unit to be
repurchased hereby in part to offset expenses incurred in administering the Offer, has approved the Offer.
The
purchase of Units pursuant to the Offer will have the effect of decreasing the size of the Trust and increasing the proportionate interest
in the Trust of investors, if any, who do not tender Units and who do not otherwise sell their Units. A reduction in the aggregate assets
of the Trust may result in investors who do not tender Units and who do not otherwise sell their Units bearing higher costs to the extent
that certain expenses borne by the Trust are relatively fixed and may not decrease if assets decline. These effects may be reduced or
eliminated to the extent that additional subscriptions for Units are made from time to time; however, the Trust is not currently offering
additional Units to investors, and will not do so during the Offer. The Trust may accept additional subscriptions in the future, if market
conditions are favorable for such subscriptions, and as permitted by applicable law.
The
Offer may be terminated, amended or postponed in the event that the Sponsor determines, in its reasonable judgment and regardless
of the circumstances giving rise to the event or events (other than any deliberate action or inaction by the Sponsor or the Trust), that
certain conditions to the Offer, as enumerated in Section 7, have not been satisfied or waived on or prior to the Expiration Date.
Units
that are tendered to the Trust in connection with this Offer will be retired, although the Trust may issue new Units from time to time
in transactions not involving any public offering conducted pursuant to Rule 506 of Regulation D under the Securities Act of 1933, as
amended (the “Securities Act”). The Trust is not currently offering additional Units to investors, and it will not do so
during the Offer, although the Trust may accept additional subscriptions in the future, if market conditions are favorable for such subscriptions,
and as permitted by applicable law.
2.
Offer to Purchase and Price. The Trust will purchase, upon the terms and subject to the conditions of the Offer, up to
20% or 1,668,107 outstanding Units that are properly tendered by and not properly withdrawn
(in accordance with Section 5 below) before the end of the day on the Expiration Date. The Purchase Price of a Unit tendered will be
its NAV as of the close of business on the Valuation Date or, if the Trust elects to extend the tender period beyond the initial Valuation
Date, the Purchase Price of a Unit tendered will be its NAV as of the close of business on the third (3rd) Business Day after
the date on which the tender offer actually expires, payable as set forth in Section 6, in each case minus a two (2) percent fee payable
to the Sponsor. The Trust reserves the right to adjust the date on which the NAV of Units will be determined to correspond with any extension
of the Offer, provided that any such extension of the Offer and any such corresponding adjustment to the Valuation Date, as applicable,
will be announced via press release as promptly as practicable after such determination has been made and not later than 9:00 a.m., New
York City time, on the first (1st) Business Day after the previously scheduled Expiration Date. The Trust reserves the right
to extend, amend or terminate the Offer as described in Sections 3 and 7 below.
The
aggregate NAV of the Trust, as of January 10, 2024, was $126,780,381 and, as of January 25, 2024, was $109,234,581. The Trust
determines its NAV at least daily and may determine its NAV more frequently. Investors may obtain the most current information regarding
the NAV of their Units by visiting www.ospreyfunds.io. This website address, however, is not intended to function as a hyperlink,
and the information contained on or accessible through such website is not incorporated by reference in this Offer to Purchase and does
not form part of the Offer. Of course, the aggregate NAV of the Trust (and therefore the NAV of the Units held by each investor) likely
will change between January 10, 2024, the date preceding the commencement of this Offer, January 25, 2024, the most recent date as
of which NAV is available, and the Valuation Date, when the value of the Units tendered by investors will be determined for purposes
of calculating the Purchase Price of such Units and the time that investors will cease to be investors in the Trust.
As of the close of business
on January 10, 2024, the Trust held approximately $126,922,290, and as of the close of business on January 25, 2024, approximately $109,462,446 in Bitcoin, cash and other assets.
3. Amount
of Tender. Subject to the limitations set forth below, investors may tender their entire holdings or a portion of their holdings.
The Offer is being made to all investors of the Trust and is not conditioned on any minimum amount of Units being tendered.
If
the amount of the Units that are properly tendered pursuant to the Offer and not properly withdrawn pursuant to Section 5 below is less
than or equal to 20% or 1,668,107 Units (or such greater amount as the Trust may elect
to purchase pursuant to the Offer), the Trust will, on the terms and subject to the conditions of the Offer, purchase all of the Units
so tendered unless the Trust elects to terminate or amend the Offer, or postpone acceptance of tenders made pursuant to the Offer, as
provided in Section 7 below. If more than 20% or 1,668,107 Units are duly tendered to
the Trust before the expiration of the Offer and not properly withdrawn pursuant to Section 5 below, the Trust will accept Units tendered
on or before the Expiration Date for payment on a pro rata basis based on the aggregate NAV of tendered Units. The Offer may be extended,
amended or terminated in various other circumstances described in Section 7 below. The Sponsor does not hold Units, however, an affiliate,
Anax Trading, LLC, holds 2,932,321 Units. Anax Trading, LLC has indicated that it does not intend to participate in the Offer.
4. Procedure
for Tenders.
Valid
Tender. If you desire to tender all or any portion of your Units, you must either:
(1)
(a) if you are a registered unitholder, complete and sign the Letter of Transmittal in accordance with the instructions to the Letter
of Transmittal, have your signature on the Letter of Transmittal guaranteed if Instruction 1 to the Letter of Transmittal so requires,
and mail or deliver the Letter of Transmittal, together with any other required documents, to CSTT, at one of its addresses shown on
the Letter of Transmittal. You should also validly complete Form W-9 or appropriate Form W-8, as applicable included in the Letter of
Transmittal to ensure no backup withholding on any payments made to you pursuant to the Offer, or
(b)
if you are a DTC participant and desire to tender Units held in book-entry form through the facilities of DTC, all of the Units must
be tendered through DTC. You must electronically transmit your acceptance of the Offer through DTC’s ATOP, for which the transaction
will be eligible. In accordance with ATOP procedures, DTC will then verify the acceptance of the Offer and send an agent’s message
to CSTT for its acceptance. An “agent’s message” is a message transmitted by DTC, received by CSTT and forming part
of the book-entry confirmation, which states that DTC has received an express acknowledgment from you that you have received the Offer
and agree to be bound by the terms of the Offer, and that the Company may enforce such agreement against you. Alternatively, you may
also confirm your acceptance of the Offer by delivering to CSTT a duly executed Letter of Transmittal.
A
tender will be deemed to have been received only when CSTT receives either (i) as to registered shareholders, a properly completed Letter
of Transmittal and all other documents required by the Letter of Transmittal; or (ii) as to DTC participants, (a) either a duly
completed agent’s message through the facilities of DTC at CSTT’s DTC account or a properly completed Letter of Transmittal,
and (b) confirmation of book-entry transfer of the Units into CSTT’s applicable DTC account; or
(2)
if you have Units registered in the name of a broker, dealer, commercial bank, trust company or other nominee, meaning your Units are
owned in “street name,” you must contact the nominee if you desire to tender those Units and request that your broker, dealer,
commercial bank, trust company or other nominee effects the transaction for you.
The
valid tender of Units by you via one of the procedures described in this Section 4 will constitute a binding agreement between you and
us on the terms of, and subject to the conditions to, the Offer.
If
a broker, dealer, commercial bank, trust company or other nominee holds your Units, it is likely that it has an earlier deadline for
you to act to instruct it to accept the Offer on your behalf. We urge you to contact your broker, dealer, commercial bank, trust company
or other nominee to determine its applicable deadline.
We
urge investors who hold Units through brokers, dealers, commercial banks, trust companies or other nominees to consult their respective
brokers, dealers, commercial banks, trust companies or other nominees to determine whether transaction costs are applicable if they tender
Units through such brokers, dealers, commercial banks, trust companies or other nominees and not directly to CSTT.
The
Units may be tendered and accepted only in whole Units. No alternative, conditional or contingent tenders will be accepted.
Signature
Guarantees. Except as otherwise provided below, all signatures on a Letter of Transmittal must be guaranteed by a financial institution
(including most banks, savings and loans associations and brokerage houses) that is a participant in any of the following: (i) the Securities
Transfer Agents Medallion Program; (ii) the New York Stock Exchange, Inc. Medallion Signature Program; or (iii) the Stock Exchange Medallion
Program. Signatures on a Letter of Transmittal need not be guaranteed if:
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(i) |
the
Letter of Transmittal is signed by a registered holder, or a participant in DTC whose name appears on a security position listing
as the owner of the Units, and such holder or DTC participant has not completed either of the box entitled “Special Delivery
Instructions” or the box entitled “Special Payment Instructions” within the Letter of Transmittal; or |
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|
|
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(ii) |
the
Units are tendered for the account of a bank, broker, dealer, credit union, savings association or other entity which is a member
in good standing of the Securities Transfer Agents Medallion Program, the New York Stock Exchange, Inc. Medallion Signature Program
or the Stock Exchange Medallion Program, or a bank, broker, dealer, credit union, savings association or other entity which is an
“eligible guarantor institution,” as such term is defined in Rule 17Ad-15 under the Exchange Act. |
The
Company will make payment for Units tendered and accepted for purchase in the Offer only after CSTT timely receives (i) as to DTC participants,
a timely confirmation of the book-entry transfer of the shares into CSTT’s account at DTC, a properly completed and a duly executed
Letter of Transmittal, or an agent’s message, and any other documents required by the Letter of Transmittal, or (ii) as to registered
shareholders, a properly completed Letter of Transmittal and all other documents required by the Letter of Transmittal.
Guaranteed
Delivery Procedure.
If
you wish to tender Units under the Offer and your book-entry Units are not immediately available or the procedures for book-entry transfer
cannot be completed on a timely basis or time will not permit all required documents to reach CSTT prior to the Expiration Time, your
tender may be effected if all the following conditions are met:
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(i) |
your
tender is made by or through an eligible institution; |
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|
|
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(ii) |
a
properly completed and duly executed Notice of Guaranteed Delivery, in the form we have provided, is received by CSTT, as provided
below, prior to the Expiration Time; and |
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|
|
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(iii) |
CSTT
receives, at the address set forth on the back cover of this Offer to Purchase and within the period of two (2) Business Days
after the date of execution of that Notice of Guaranteed Delivery, a Letter of Transmittal, which has been properly completed and
duly executed and includes either: (i) as to a registered shareholder, a Letter of Transmittal, which has been properly completed
and duly executed and includes all signature guarantees required thereon and all other required documents; or (ii) as to a DTC participant,
a book-entry confirmation evidencing all tendered Units, in proper form for transfer, in each case together with the Letter of Transmittal,
validly completed and duly executed, with any required signature guarantees (or an agent’s message), and any other documents
required by the Letter of Transmittal. |
Notice
of Guaranteed Delivery must be delivered to CSTT by overnight courier, facsimile transmission or mail before the Expiration Time and
must include a guarantee by an eligible institution in the form set forth in the Notice of Guaranteed Delivery.
Book-Entry
Delivery. We have been informed by CSTT that none of our Units are certificated.
As
to registered shareholders, a shareholder should deliver a completed and signed Letter of Transmittal in accordance with the instructions
to the Letter of Transmittal, have the shareholder’s signature on the Letter of Transmittal guaranteed if Instruction 1 to the
Letter of Transmittal so requires, and mail or deliver the Letter of Transmittal, together with any other required documents, to CSTT,
at one of its addresses shown on the Letter of Transmittal. Such shareholder should also validly complete IRS Form W-9 or appropriate
IRS Form W-8, as applicable, included in the Letter of Transmittal to ensure no backup withholding on any payments made to you pursuant
to the Offer.
As
to DTC participants, CSTT will establish an account with respect to the Units for purposes of the Offer at DTC within two (2)
Business Days after the date of this Offer to Purchase, and any financial institution that is a DTC participant may make
book-entry delivery of the Units by causing DTC to transfer Units into CSTT’s account in accordance with DTC’s
procedures for transfer. Although DTC participants may effect delivery of Units into CSTT’s account at DTC, such deposit must
be accompanied by a message that has been transmitted to CSTT through the facilities of DTC or “agent’s message,”
or a properly completed and duly executed Letter of Transmittal, including any other required documents, that has been transmitted
to and received by CSTT at its address set forth on the back page of this Offer to Purchase before the Expiration Time.
Method
of Delivery. The method of delivery of book-entry Units, either through the Letter of Transmittal and all other required documents
for registered shareholders, or through the DTC for DTC participants, is at the election and risk of the tendering shareholder. If you
plan to make delivery of Letter of Transmittal by mail, we recommend that you deliver by registered mail with return receipt requested
and obtain proper insurance. In all cases, sufficient time should be allowed to ensure timely delivery.
5. Withdrawal
Rights. Any investor tendering Units pursuant to this Offer may withdraw its tender (a) at any time on or before the applicable Expiration
Date and (b) at any time after March 11, 2024, if Units have not then been accepted by the Trust. To be effective, any notice of withdrawal
must be timely received by CSTT at the address or fax numbers set forth on the back cover of this Offer to Purchase. Such receipt should
be confirmed by the investor in accordance with the procedures set out in Section 4 above. A form to use to give notice of withdrawal
is available by calling the Information Agent at the phone number indicated on page 2. All questions as to the form and validity (including
time of receipt) of notices of withdrawal will be determined by the Trust, in its sole discretion, and such determination shall be final
and binding absent a finding to the contrary by a court of competent jurisdiction. Units properly withdrawn shall not thereafter be deemed
to be tendered for purposes of the Offer. However, withdrawn Units may again be tendered prior to the Expiration Date by following the
procedures described in Section 4. You are responsible for confirming that any notice of withdrawal is received by CSTT. If you fail
to confirm receipt of a notice of withdrawal by CSTT, there can be no assurance that any withdrawal you may make will be honored by the
Trust.
If
you hold Units through a broker, dealer, commercial bank, trust company or similar institution, you should consult that institution on
the procedures you must comply with and the time by which such procedures must be completed in order for that institution to provide
a written notice of withdrawal.
If
Units have been delivered in accordance with the procedures for book-entry transfer described in Section 4, any notice of withdrawal
must also specify the name and number of the account at the DTC to be credited with the withdrawn shares and otherwise comply with the
DTC’s procedures.
6. Purchases
and Payment. For purposes of the Offer, the Trust will be deemed to have accepted (and, thereby, to have agreed to purchase) Units
that are tendered as, if and when it gives written notice to the tendering investor of its election to purchase such Unit. As stated
in Section 2 above, the Purchase Price of a Unit tendered by any investor will be the NAV thereof as of the close of business on the
Valuation Date. If the Trust elects to extend the tender period for any reason beyond the Valuation Date, for the purpose of determining
the Purchase Price for tendered Units, the NAV of such Units will be determined at the close of business on the third (3rd)
Business Day after the date on which the tender offer actually expires. The Trust reserves the right to adjust the date on which the
NAV of the Units will be determined to correspond with any extension of the Offer, provided that any such extension of the Offer and
any such corresponding adjustment to the Valuation Date, as applicable, will be announced via press release as promptly as practicable
after such determination has been made and not later than 9:00 a.m., New York City time, on the first (1st) Business Day after
the previously scheduled Expiration Date.
Investors
may tender all or some of their Units. In either case, repurchases of Units by the Trust will be paid as promptly as practicable after
the applicable Valuation Date.
Upon
the terms and subject to the conditions of the Offer, the Trust will accept for payment and pay Purchase Price for all of the Units accepted
for payment pursuant to the Offer promptly after the Expiration Time. In all cases, payment for Units tendered and accepted for payment
pursuant to the Offer will be made as promptly as practicable, subject to possible delay in the event of proration, but only after timely
receipt by CSTT of:
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● |
as
to a DTC participant, (a) either a duly completed agent’s message through the facilities of DTC at CSTT’s DTC account
or a properly completed Letter of Transmittal, and (b) confirmation of book-entry transfer of the Units into CSTT’s applicable
DTC account; or as to a registered shareholder, a properly completed and duly executed Letter of Transmittal; and |
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|
|
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● |
any
other required documents by the Letter of Transmittal. |
The
Trust will deposit the amounts payable in separate accounts with CSTT. All cash payments described above (the “Cash Payments”)
will be made by check or wire transfer, either directly to the brokerage firm of record or, if not held at a brokerage firm, directly
to the physical address or the account, as applicable, designated by the tendering investor.
In
the event of proration, we will determine the proration factor and pay for those tendered Units accepted for payment promptly after the
Expiration Time. Units tendered and not purchased, including Units not purchased due to proration, will stay at the registered
shareholder’s book-entry account at our transfer agent, or, in the case of Units tendered by book-entry transfer through the facilities
of DTC, will be credited to the appropriate account maintained by relevant DTC participants at the DTC, in each case without expense
to the shareholder.
The
Trust will seek to obtain cash in the aggregate amount necessary to pay the Purchase Price for Units acquired pursuant to the Offer from
the sale of Bitcoin and no alternative financing plans or arrangements for the transaction are currently contemplated. There
can be no assurances, however, that there will not be delays in the making of any of the Cash Payments provided for above. This may occur,
among other reasons, during periods of financial market stress or if the Trust, after reasonable and diligent effort, is otherwise unable
to dispose of Bitcoin for reasons outside of its control.
The
Trust will impose a fee of two (2) percent of NAV on repurchases of Units in the Trust, which fee will be payable to the Sponsor in part
to offset expenses incurred administering the Offer, including processing of tender forms, effecting payment, postage and handling.
Under
no circumstances will we pay interest on the purchase price, including but not limited to, by reason of any delay in making payment.
In addition, if certain events occur, we may not be obligated to purchase Units pursuant to the Offer. See Section 7.
We
will pay all share transfer taxes, if any, payable on the transfer to us of Units purchased pursuant to the Offer. If, however, payment
of the Purchase Price is to be made to, or (in the circumstances permitted by the Offer) if unpurchased Units are to be registered in
the name of, any person other than the registered unitholder, or if tendered book-entry Units are registered in the name of any person
other than the person signing the Letter of Transmittal, the amount of all share transfer taxes, if any (whether imposed on the registered
holder or the other person), payable on account of the transfer to the person will be deducted from the Purchase Price unless satisfactory
evidence of the payment of the share transfer taxes, or exemption from payment of the share transfer taxes, is submitted. See Instruction
6 of the Letter of Transmittal.
7.
Certain Conditions of the Offer. The Trust reserves the right, at any time and from time to time, to extend the period
of time during which the Offer is pending by promptly notifying investors of such extension. If the Trust elects to extend the tender
period for any reason beyond the Valuation Date, for the purpose of determining the Purchase Price for tendered Units, the NAV of such
Units will be determined at the close of business on the third (3rd) Business Day after the date on which the tender offer
actually expires. The Trust reserves the right to adjust the date on which the NAV of the Units will be determined to correspond with
any extension of the Offer, provided that any such extension of the Offer and any such corresponding adjustment to the Valuation Date,
as applicable, will be announced via press release as promptly as practicable after such determination has been made and not later than
9:00 a.m., New York City time, on the first (1st) Business Day after the previously scheduled Expiration Date. During
any such extension, all Units previously tendered and not properly withdrawn will remain subject to the Offer. The Trust also reserves
the right, in its reasonable discretion, at any time and from time to time up to and including acceptance of tenders pursuant to the
Offer: (a) to terminate the Offer in the circumstances set forth in the following paragraph and in the event of such termination, not
to purchase or pay for any Units tendered pursuant to the Offer; (b) to amend the Offer; or (c) to postpone the acceptance of Units.
If the Trust decides to amend the Offer or to postpone the acceptance of Units tendered, it will, to the extent necessary, extend the
period of time during which the Offer is open as provided above, and in the event that the Trust decides to terminate, amend or postpone
the Offer for any reason, it will promptly notify investors.
The Trust may terminate the
Offer, amend the Offer or postpone the acceptance of tenders made pursuant to the Offer, in each case with prompt notice to investors,
if in the Sponsor’s reasonable judgment and regardless of the circumstances giving rise to the event or events (other than any
deliberate action or inaction by the Sponsor or the Trust), any of the following have occurred: (a) the Trust would not be able to sell
Bitcoin in an orderly manner in light of existing market conditions outside of the Trust’s or the Sponsor’s control, including
but not limited to, as a result of certain factors otherwise described in this paragraph, and such liquidation would have a material
adverse effect on the NAV of the Trust to the detriment of the non-tendering unitholders such that completion of the Offer would
be impractical or inadvisable; (b) there is any (i) legal action or proceeding instituted or threatened challenging the Offer or
that otherwise would have a material adverse effect on the Trust, (ii) declaration of a cryptocurrency, banking or similar
moratorium by federal or state authorities or any suspension of payment by banks in the United States or New York State that is material
to the Trust, (iii) limitation imposed by federal or state authorities on the extension of credit by lending institutions, (iv) suspension
of trading by any dealer the Trust uses as a counterparty for Bitcoin purchases and sales, any such counterparty’s unilateral
refusal to trade with the Trust for any reason or technical difficulties experienced by any such counterparty that would prohibit or
materially hinder its ability to trade in Bitcoin, (v) commencement of war, armed hostilities or other international or national
calamity directly or indirectly involving the United States that is reasonably likely to materially and adversely affect the Trust, the
Units or the Trust’s ability to complete the Offer, or (vi) other event or condition that would have a material adverse effect
on the Trust or its investors if Units tendered pursuant to the Offer were purchased; or (c) the Sponsor determines in good faith,
based upon the opinion of legal counsel, that effecting any such transaction would constitute a breach of its traditional
fiduciary duties of loyalty and care owed to the Trust or its unitholders, or the fiduciary duties and standards set forth
in the Trust Agreement. However, there can be no assurance that the Trust will exercise its right to extend, amend or terminate the
Offer or to postpone acceptance of tenders pursuant to the Offer. If conditions qualifying as war or armed hostilities as expressed in
Section 7(b)(v) above occur (and, at present, the Trust does not believe these conditions exist), and the Sponsor waives the Trust’s
rights under this Section 7, they will determine whether such waiver constitutes a material change to the Offer. If they determine that
it does, the Offer will remain open for at least five (5) Business Days following the waiver and investors will be notified of this occurrence.
8.
Certain Information About the Trust. The Trust is organized as a Delaware statutory trust, formed on January 3, 2019, which commenced
operations on January 22, 2019. In general, the Trust holds Bitcoin and, from time to time, issues Units in exchange for Bitcoin. The
investment objective of the Trust is for the Units to track the price of Bitcoin, less liabilities and expenses of the Trust. The Units
are designed as a convenient and cost-effective method for investors to gain investment exposure to Bitcoin, similar to a direct investment
in Bitcoin. The Sponsor is responsible for the day-to-day administration of the Trust pursuant to provisions of the Second Amended and
Restated Declaration of Trust and Trust Agreement dated November 1, 2020, as amended by the Amendment to the Trust Agreement dated April
15, 2022, and the Amendment to the Trust Agreement dated January 18, 2024 (the “Trust Agreement”). Coinbase Custody Trust Company, LLC is the digital asset custodian of the Trust and is responsible for safeguarding
the Bitcoin held by the Trust.
The
principal executive office of the Trust and the Sponsor is located at 1241 Post Road, 2nd Floor, Fairfield, Connecticut 06824
and the telephone number is (914) 214-4697. The officers of the Sponsor are: Gregory D. King and Robert Rokose. Their address is c/o
Osprey Funds, LLC, 1241 Post Road, Street, 2nd Floor, Fairfield, Connecticut 06824.
None
of the Sponsor, its officers or affiliates intend to participate in the Offer, though the Sponsor will receive a fee of two (2) percent
of NAV per Unit to be repurchased in the Offer in part to offset expenses incurred in administering the Offer.
The
Trust is subject to the informational filing requirements of the Exchange Act, which obligates it to file reports, statements and other
information with the SEC relating to our business, financial condition and other matters. As required by Exchange Act Rule 13e-4(c)(2),
the Trust has also filed with the SEC the Schedule TO, which includes additional information relating to the Offer. These reports, statements
and other information, including the Schedule TO, all of the exhibits to it, and documents incorporated by reference, are available to
the public on or accessible through the SEC’s site at https://www.sec.gov. This website address is not intended to function as
a hyperlink, and the information contained on or accessible through the SEC’s website is not incorporated by reference in this
Offer to Purchase and it should not be considered to be a part of this Offer to Purchase.
Units
are distributed by the Sponsor through sales in private placement transactions exempt from the registration requirements of the Securities
Act pursuant to Rule 506(c) thereunder; there are no current offerings of Units at this time.
The
Trust’s Units have been quoted on OTC Markets since February 12, 2021, and on OTCQX since February 26, 2021, under the symbol “OBTC”.
The price of the Units as quoted on OTCQX (and OTC Markets) has varied significantly from the NAV per Unit. From February 12, 2021 to
December 31, 2023, the maximum premium of the closing price of the Units quoted on OTCQX (and OTC Markets) over the value of the Trust’s
NAV per Unit was approximately 240% and the average daily discount since the Units were first traded on OTC Markets on February 12, 2021
was approximately 14%. As of December 31, 2023, the Trust’s Units were quoted on OTCQX at a discount of approximately 10% to the
Trust’s NAV per Unit.
The
following table sets out the range of high and low closing prices for the Units as reported by OTCQX for each quarter during the past
two years:
| | |
High | | |
Low | |
| Three months ended December 31, 2021 | |
$ | 19.09 | | |
$ | 12.62 | |
| Three months ended March 31, 2022 | |
$ | 12.89 | | |
$ | 9.40 | |
| Three months ended June 30, 2022 | |
$ | 12.30 | | |
$ | 5.05 | |
| Three months ended September 30, 2022 | |
$ | 6.65 | | |
$ | 4.85 | |
| Three months ended December 31, 2022 | |
$ | 5.04 | | |
$ | 3.00 | |
| Three months ended March 31, 2023 | |
$ | 6.43 | | |
$ | 3.30 | |
| Three months ended June 30, 2023 | |
$ | 7.02 | | |
$ | 4.98 | |
| Three months ended September 30, 2023 | |
$ | 7.79 | | |
$ | 6.27 | |
| Three months ended December 31, 2023 | |
$ | 12.90 | | |
$ | 6.95 | |
| Three months ended March 31, 2024 (through January 25, 2024) | |
$ | 13.42 | | |
$ | 11.22 | |
The
Trust does not have any plans or proposals that relate to or would result in: (a) the acquisition by any person of additional Units (although
the Trust retains the right, which it does not currently intend to act on, to accept subscriptions for Units from time to time in the
discretion of the Trust consistent with applicable law); (b) an extraordinary transaction, such as a merger, reorganization or liquidation,
involving the Trust; (c) any material change in the present distribution policy or indebtedness or capitalization of the Trust; (d) any
change in the identity of the Sponsor of the Trust, or in the management of the Trust Sponsor; (e) a sale or transfer of a material amount
of assets of the Trust (other than as the Sponsor determine may be necessary or appropriate to fund any portion of the Purchase Price
for Units acquired pursuant to this Offer to Purchase or in connection with the ordinary portfolio transactions of the Trust); (f) any
other material change in the Trust’s structure or business, including any plans or proposals to make any changes in its fundamental
investment policy; or (g) any changes in Trust Agreement or other actions that may impede the acquisition of control of the Trust by
any person.
Rule
13e-4(f) under the Exchange Act prohibits the Trust and its affiliates from purchasing any Units, other than in the Offer, until at
least ten (10) Business Days have elapsed after the Expiration Date. Accordingly, any additional purchases outside the Offer may not
be consummated until at least ten (10) Business Days have elapsed after the Expiration Date. Beginning on the eleventh
(11th) Business Day after the Expiration Date, the Trust, at the discretion of the Sponsor, may arrange to
purchase Units from time to time, including in private transactions with affiliates, and it may consider future limited periodic
redemptions of Units in compliance with applicable law. Any of these repurchases may be on the same terms or on terms that are more
or less favorable to the selling unitholders in those transactions than the terms of the Offer. The Sponsor currently contemplates,
but has not definitively determined, to cause the Trust on or after the eleventh (11th) Business Day after the Expiration
Date to negotiate an agreement or agreement(s) to repurchase, in kind or cash, Units held by Anax Trading, LLC, an
affiliate of the Sponsor. The Sponsor believes that a single, or series of, private transactions to repurchase Units held by
affiliates would be in the best interest of the Trust to mitigate against the possibility that the Offer will be oversubscribed and
subject to proration.
During
the past sixty (60) days, there were no transactions involving Units that were effected by the Trust, the Sponsor, or any person controlling,
or under common control with, the Trust or the Sponsor.
9. Interests
of Executive Officers of the Sponsor.
As
of January 10, 2024, there were 8,340,536 Units issued and outstanding. The maximum number of Units we are accepting in the Offer,
1,668,107, represents approximately 20% of our issued and outstanding Units as of January 10, 2024.
The
Trust does not have any directors, officers or employees. Under the Trust Agreement, all management functions of the Trust have been
delegated to and are conducted by the Sponsor, its agents and its affiliates. As officers of the Sponsor, Gregory D. King, Chief Executive
Officer of the Sponsor, and Robert Rokose, Chief Financial Officer of the Sponsor, serve as the principal executive officer and principal
financial officer, respectively, of the Trust. The following table sets forth information relating to the beneficial ownership of our
Units by Messrs. King and Rokose, as determined in accordance with Rule 13d-3 of the Exchange Act, as of January 10, 2024,
based on a total number of Units outstanding as of such date.
Unless
otherwise indicated, the business address of each of the persons named in the table below is: c/o Osprey Funds, LLC, 1241 Post Road,
2nd Floor, Fairfield, CT 06824.
| Name and Address of Beneficial Owner | |
Amount and Nature
of Beneficial
Ownership | | |
Percentage of
Beneficial
Ownership | |
| | |
| | |
| |
| Executive
Officers of the Sponsor: (1) | |
| | | |
| | |
| Robert Rokose | |
| 2,056 | | |
| * | % |
| Gregory King | |
| 2,936,434 | (2) | |
| 35 | % |
| Executive officers of the Sponsor as a group | |
| 2,938,490 | | |
| 35 | % |
(1)
The Trust does not have any directors, officers or employees. Under the Trust Agreement, all management functions of the Trust
have been delegated to and are conducted by the Sponsor, its agents and its affiliates.
(2)
2,932,321 Units in this column are held by an affiliate of the Sponsor, Anax Trading, LLC, and may be deemed to be beneficially
owned by Mr. King.
| * |
Represents
beneficial ownership of less than 1%. |
10.
Certain U.S. Federal Income Tax Consequences. The following discussion is a general summary of the material U.S. federal income tax
consequences of the purchase of Units by the Trust pursuant to the Offer. This summary does not address all the tax consequences that
are specific to investors in light of such investor’s particular circumstances, including tax consequences to investors that are
not U.S. persons for U.S. federal income tax purposes (including non-U.S. persons who are partnerships or hold Units in a partnership),
which consequences may be significant (including additional tax, or withholding or reporting obligations), or tax consequences to investors
subject to special rules, such as entities or arrangements classified as partnerships for U.S. federal income tax purposes. Each investor
should consult its own tax advisors about the tax consequences to it of a purchase of its Units by the Trust pursuant to the Offer given
such investor’s individual circumstances, as well as any tax consequences arising under the laws of any state, local or foreign
taxing jurisdiction. This discussion applies only to Units that are held as capital assets and does not address alternative minimum tax
consequences or consequences of the tax on net investment income. This discussion assumes the Trust only holds Bitcoin.
Subject
to certain exceptions, some of which are described below, an investor who tenders all of its Units (and whose Units are entirely repurchased)
to the Trust for repurchase generally will recognize capital gain or loss to the extent of the difference between the proceeds received
by such investor and such investor’s adjusted tax basis in its Units. Gain, if any, will be recognized by a tendering investor
only if the total proceeds received by such investor exceed the investor’s adjusted tax basis in its Units. This capital gain or
loss will be short-term, long-term, or some combination of both, depending on the investor’s holding period for its Units at the
time the gain or loss is realized. An investor may have a fragmented holding period for its Units if the investor has made contributions
to the Trust at different times. This capital gain or loss will be short-term, long-term, or some combination of both, depending upon
the investor’s holding period for its Units.
Certain
investors that are individuals, estates or trusts, and whose income exceeds certain thresholds, will be required to pay a 3.8% tax on
all or a portion of their “net investment income,” which may include all or a portion of any capital gains recognized in
connection with a sale of Units pursuant to the Offer.
The
Trust may be required to withhold, for U.S. federal income taxes, a portion of the tender proceeds payable to investors that fail to
provide the Trust with their correct taxpayer identification numbers or who otherwise fail to make required certifications, or if the
Trust or the investor has been notified by the Internal Revenue Service (“IRS”) that such investor is subject to backup withholding.
Certain investors are exempt from backup withholding, but may be required to provide documentation to establish their exempt status.
Backup withholding is not an additional tax. Any amounts withheld will be allowed as a refund or a credit against the investor’s
federal income tax liability if the appropriate information is timely provided to the IRS.
11. Accounting Treatment.
The purchase of Units pursuant to the Offer will result in a reduction of the Trust’s net assets in an amount equal to the aggregate
Purchase Price, with a corresponding increase in liabilities payable to redeeming unitholders. The two (2) percent redemption fees will
be recorded as an expense with a corresponding increase in liabilities payable to the Sponsor. Once the Bitcoin held in the Trust is
converted to cash, the value of the investment in Bitcoin will decrease by approximately the aggregate NAV of the redeeming units, with
a corresponding increase in cash. After the payments to the redeeming unitholders and the Sponsor are issued, the total cash will decrease
for the aggregate NAV of the redeeming units with the corresponding extinguishing of the liabilities.
12.
Disclosure Provisions. Provisions of the Internal Revenue Code of 1986, as amended, and Treasury Regulations require taxpayers
that participate in “reportable transactions” to disclose such participation to the IRS (by attaching IRS Form 8886 to
their tax returns and filing a copy of that Form with the IRS Office of Tax Shelter Analysis) and to comply with certain document
retention requirements. In addition, certain “material advisors” with respect to such a transaction are required to
maintain records, including lists identifying investors in the transaction, and must furnish those records to the IRS upon demand. A
transaction may be a “reportable transaction” based on any of several criteria, one or more of which may be present with
respect to an investment in or by the Trust or the tender of Units, including, among others, the recognition of a loss in excess of
a prescribed threshold upon the tender of Units. These disclosure provisions are directed towards “tax shelters,”
however, they are quite broad and may encompass transactions that typically would not be considered “tax shelters.”
Significant penalties may apply upon a failure to comply with the disclosure provisions, and with respect to any understatements of
tax resulting from participation in certain reportable transactions. Investors should consult their own tax advisors concerning any
possible disclosure obligation they may have with respect to their investment in the Trust and any tender of Units and should be
aware that the Trust (and perhaps other participants in the transaction) intends to comply with the disclosure and investor list
maintenance requirements to the extent the Trust determines them to apply with respect to this transaction and/or its
investments.
13.
Fees and Expenses. We have retained Morrow
Sodali LLC to act as Information Agent and CSTT to act as Depositary in connection with the Offer. The Information Agent may contact
holders of Units by mail or telephone and may request brokers, dealers, commercial banks, trust companies and other nominees to forward
materials relating to the Offer to beneficial owners. The Information Agent and the Depositary will each receive reasonable and customary
compensation for their respective services, will be reimbursed by us for reasonable out-of-pocket expenses and will be indemnified by
us against certain liabilities in connection with the Offer, including certain liabilities and expenses under federal securities laws.
We
do not currently expect to pay any fees or commissions to brokers, dealers, commercial banks, trust companies or other nominees (other
than fees to the Information Agent and Depositary as described above) for soliciting tenders of shares pursuant to the Offer. We will,
however, upon request, reimburse brokers, dealers, commercial banks, trust companies and other nominees for reasonable and customary
mailing and handling expenses incurred by them in forwarding the Offer materials to their customers. No broker, dealer, commercial bank,
trust company or other nominee has been authorized to act as our agent or the agent of the Information Agent or the Depositary for purposes
of the Offer. We will pay or cause to be paid all share transfer taxes, if any, on our purchase of Units, except as otherwise provided
herein or in Instruction 6 to the Letter of Transmittal.
14.
Miscellaneous. The Offer is being made solely
pursuant to the Offer to Purchase and related Letter of Transmittal and is being made to all holders of the Units. The Trust is not soliciting
any Units in the Offer in any jurisdiction where it would be illegal to do so, provided that the Trust will comply with the requirements
of Rule 13e-4(f)(8) promulgated under the Exchange Act. Validly tendered Units will be accepted from all holders wherever located. The
Trust may, at its discretion, take any action necessary for it to make the Offer to holders of Units in any such jurisdiction in compliance
with applicable laws.
The
Trust has filed an Issuer Tender Offer Statement on Schedule TO with the SEC, which includes certain information relating to the Offer
summarized herein. A free copy of such statement may be obtained from the Trust by contacting the Trust at the phone number set forth
on page 2 or from the SECs website, http://www.sec.gov. This website address is not intended to function as a hyperlink, and the information
contained on or accessible through the SEC’s website is not incorporated by reference in this Offer to Purchase and it should not
be considered to be a part of this Offer to Purchase.
You
should only rely on the information contained in this Offer to Purchase or to which we have referred to you. We have not authorized any
person to make any recommendation on behalf of us as to whether you should tender or refrain from tendering your shares. We have not
authorized any person to give any information or to make any representation in connection with the Offer other than those contained in
this Offer to the Purchase or in the related Letter of Transmittal. If given or made, any recommendation or any such information or representation
must not be relied upon as having been authorized by us, CSTT, or the Information Agent.
The
Letter of Transmittal and any other required documents should be sent or delivered by each shareholder of the Company or his or her broker,
dealer, commercial bank, trust company or other nominee to CSTT as follows:
The
Depositary for the Offer is:
By
Mail or Overnight Courier:
(for
eligible institutions only):
Continental
Stock Transfer & Trust Company
1
State Street, 30th Floor
New
York, NY 10004
Attention:
Corporate Actions Department |
By
Facsimile Transmission:
212-616-7610
Continental
Stock Transfer & Trust Company
1
State Street, 30th Floor
New
York, NY 10004
Attention:
Corporate Actions Department |
Delivery
of the letter of transmittal to an address other than as set forth above will not constitute a valid delivery to CSTT.
Questions
and requests for assistance or for additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent at the telephone number and location listed below. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for assistance concerning the Offer.
The
Information Agent for the Offer is:
Morrow
Sodali LLC
333
Ludlow Street, 5th Floor, South Tower
Stamford,
CT 06902
Individuals
call toll-free (800) 662-5200
Banks
and brokers call (203) 658-9400
Email:
OBTC.info@investor.morrowsodali.com
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