Sequans Offloads 970 Bitcoin to Reduce Debt, Price Dips to $101K

Bitcoin Magazine

Sequans Offloads 970 Bitcoin to Reduce Debt, Price Dips to $101K

Sequans Communications S.A. (NYSE: SQNS) has made a significant financial move by selling 970 Bitcoin. This strategic decision allowed the company to pay off 50% of its convertible debt from July, effectively cutting its total liabilities from $189 million down to $94.5 million.

Following this transaction, Sequans' Bitcoin treasury now holds 2,264 BTC, valued at approximately $240 million. This sale has improved the company’s debt-to-net-asset-value ratio from 55% to a more manageable 39%, providing the organization with greater capital flexibility, particularly in relation to its ADS buyback initiative.

Notably, Sequans has become the first publicly traded company with a Bitcoin treasury to liquidate a considerable portion of its assets. Despite this sale, the firm reassured investors that it remains committed to its long-term Bitcoin strategy.

Based in Paris, Sequans specializes in IoT semiconductors and will continue its Bitcoin treasury strategy while also exploring opportunities in capital markets. These opportunities may involve issuing preferred shares and generating yield on the remaining Bitcoin in its treasury.

After the announcement, Sequans' stock fell to around $6.25, a drop of 13%. This decline reflects a year-to-date plunge of 82% in share value.

The company currently boasts a current ratio of 1.83 and reported revenues of $8.1 million for the second quarter, despite recording a net loss of $9.1 million. The reduction in debt alleviates covenant constraints and enhances the strategic flexibility regarding Bitcoin treasury management.

Market analysts had anticipated this move, as they had noted a transfer of Bitcoin from a wallet associated with Sequans to a Coinbase address just a week prior to the sale.

In July, Sequans made headlines by launching a Bitcoin treasury initiative backed by a substantial $384 million private placement. This funding comprised $195 million in equity securities and $189 million in convertible secured notes, aimed at developing a Bitcoin position alongside the company’s core IoT operations.

Sequans’ decision to sell comes at a time when Bitcoin is facing significant downward pressure, currently trading below $101,000. This marks a notable decline from its all-time high of over $126,000 reached in early October.

The ongoing price slump can be attributed to substantial outflows from cryptocurrency exchange-traded funds (ETFs), with spot Bitcoin ETFs experiencing a loss of $1.3 billion and spot Ether ETFs seeing nearly $500 million exit since October 29.

Additional technical pressures have also impacted Bitcoin's price, particularly as it dipped below its 200-day moving average—a critical indicator of long-term momentum. Factors such as a strengthening U.S. dollar and lingering market anxieties following October’s “crypto Black Friday” liquidation event have further dampened investor interest.

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