How dumping 1,200 Bitcoin helped a cellular chipmaker completely erase its debt and double its cash
Sequans Communications decreased its Bitcoin treasury by 79.3% through the second quarter, leaving 314 BTC at June 30 because the cellular chipmaker used Bitcoin gross sales to assist eradicate convertible debt and bolster cash.
Holdings fell from 1,514 BTC at March 31 to 314 BTC three months later, a discount of 1,200 BTC. Sequans valued the remaining cash at $18.4 million and mentioned all of them have been unrestricted and out there on the market. Its Aug. 4 outcomes contained no post-quarter holdings rely, so 314 BTC is a June 30 snapshot somewhat than a present stability.
The unwind adopted a February settlement to redeem the remaining $94.5 million principal of convertible debt by June 1. By April 30, Sequans held 1,114 BTC, together with 817 pledged towards $35.9 million of remaining debt.
On May 28, the corporate announced that it had completed the redemption utilizing Bitcoin-sale proceeds. It reported roughly 658 BTC at that time, all unrestricted, and then continued lowering the place by way of June.
The dated balances present the unwind continued through the second quarter. Holdings have been already 400 BTC beneath the March 31 degree by April 30. Between the May 28 redemption announcement and June 30, the reported complete fell by roughly 344 BTC from the corporate’s approximate May stability.
Bitcoin gross sales erased debt and strengthened cash
Sequans mentioned its second-quarter Bitcoin gross sales have been primarily used to finance the debt redemption and strengthen cash. Cash and cash equivalents rose to $21 million at June 30 from $10.6 million at March 31, whereas convertible debt fell to zero by quarter-end.
The shift made each remaining coin out there to the corporate. None of the 314 BTC was pledged at June 30, turning what remained of the treasury into an asset Sequans may promote for added balance-sheet liquidity somewhat than collateral supporting the retired debt.
The quarter’s accounting additionally separates the treasury unwind from the general internet loss. Sequans recorded a $5.3 million realized internet achieve on Bitcoin gross sales alongside a $3 million unrealized impairment loss on the funding. It reported preliminary unaudited quarterly income of $7.5 million and a internet lack of $9.8 million, so the bottom-line loss was not a realized loss on the Bitcoin disposals.
Sequans entered the quarter with 1,514 BTC and ended it with about one-fifth as many, no convertible debt and almost twice as a lot cash. The remaining cash now not again borrowing; they symbolize an unrestricted asset the corporate can monetize because it continues exiting the treasury technique.
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