How dumping 1,200 Bitcoin helped a cellular chipmaker completely erase its debt and double its cash

Sequans Communications reduced its Bitcoin treasury by 79.3% during the second quarter, leaving 314 BTC at June 30 as the cellular chipmaker used Bitcoin sales to help eliminate convertible debt and bolster cash.

Holdings fell from 1,514 BTC at March 31 to 314 BTC three months later, a reduction of 1,200 BTC. Sequans valued the remaining coins at $18.4 million and said all of them were unrestricted and available for sale. Its Aug. 4 results contained no post-quarter holdings count, so 314 BTC is a June 30 snapshot rather than a current balance.

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The unwind followed a February agreement to redeem the remaining $94.5 million principal of convertible debt by June 1. By April 30, Sequans held 1,114 BTC, including 817 pledged against $35.9 million of remaining debt.

On May 28, the company announced that it had completed the redemption using Bitcoin-sale proceeds. It reported approximately 658 BTC at that point, all unrestricted, and then continued reducing the position through June.

The dated balances show the unwind continued during the second quarter. Holdings were already 400 BTC below the March 31 level by April 30. Between the May 28 redemption announcement and June 30, the reported total fell by roughly 344 BTC from the company's approximate May balance.

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Bitcoin sales erased debt and strengthened cash

Sequans said its second-quarter Bitcoin sales were 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, while convertible debt fell to zero by quarter-end.

The shift made every remaining coin available to the company. None of the 314 BTC was pledged at June 30, turning what remained of the treasury into an asset Sequans could sell for additional balance-sheet liquidity rather than collateral supporting the retired debt.

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The quarter's accounting also separates the treasury unwind from the overall net loss. Sequans recorded a $5.3 million realized net gain on Bitcoin sales alongside a $3 million unrealized impairment loss on the investment. It reported preliminary unaudited quarterly revenue of $7.5 million and a net loss 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 nearly twice as much cash. The remaining coins no longer back borrowing; they represent an unrestricted asset the company can monetize as it continues exiting the treasury strategy.

The post appeared first on CryptoSlate.