Sequans Communications Converts $384 Million to Bitcoin for Long-Term Hedge

Sequans Communications, a leading semiconductor company, has made a bold strategic move by converting its traditional cash reserves into Bitcoin. The company has allocated $384 million in newly raised capital into the cryptocurrency, marking one of the most aggressive corporate pivots towards Bitcoin since Michael Saylor’s firm initiated the trend in 2020.

On July 8, Sequans Communications announced the completion of a $384 million private placement, backed by over 40 institutional investors. The raise consisted of $195 million in equity and $189 million in convertible debt, with the majority of the funds being directed towards acquiring Bitcoin. This move is seen as a long-term hedge, with the company’s CEO, Georges Karam, citing Bitcoin’s scarcity and resilience as superior to traditional cash reserves.

Karam emphasized that the move is aimed at enhancing the company’s financial resilience and creating long-term value for shareholders. Sequans intends to continue acquiring Bitcoin in the future, using excess cash generated from its core business operations and additional proceeds. The speed and scale of Sequans’ Bitcoin conversion are noteworthy, with the raise completed just weeks after the company first announced its pivot in June. This indicates strong investor interest and a well-planned strategy.

The involvement of regulated placement agents such as Northland Capital Markets and B. Riley Securities underscores traditional finance’s willingness to support Bitcoin-centric strategies. Yorkville Securities, known for its deals with various digital asset ventures, also played a role in closing the transaction. In addition to the equity and convertible debt, investors received common stock warrants exercisable within 90 days. If fully executed, these warrants could add another $57.6 million to Sequans’ balance sheet.

The company plans to use the proceeds primarily to acquire Bitcoin, with the remainder allocated to support treasury-related corporate functions. To execute this strategy, Sequans has partnered with Swan Bitcoin, an institutional service provider, to handle custody and execution. This partnership suggests a strong focus on regulatory compliance and security, which are critical for public companies dealing with digital assets.

Sequans’ NYSE listing remains in jeopardy after the company’s market cap fell below $50 million, prompting a cure period to avoid delisting. The Bitcoin pivot and the capital injection appear to be part of a broader effort to reset the company’s financial trajectory. The move has been well-received by investors, with shares experiencing a significant jump in pre-market trading.