Trump Media & Technology Group, the company behind the Truth Social platform, faces a possible cash payment of up to approximately $1 billion on November 30. Holders of the convertible bonds can request repayment of the debt's principal value plus accrued interest.
In its quarterly report, the company warned that it may not have sufficient funds or access to financing to meet the obligation if all bondholders exercise this right. The bonds mature in 2028, but the agreement allows for early redemption at the creditors' request.
Bitcoin remains the main financial resource
As of September 30, Trump Media had $182 million in cash, $31 million in restricted cash and $211 million in short-term investments. Total financial assets stood at approximately $2.3 billion, with roughly $1.7 billion invested in bitcoin and bitcoin-related assets.
The company held approximately 15,649 bitcoins, of which around 11,385 had been provided as collateral under its yield-management program. In a subsequent transaction, Trump Media sold 13,597 bitcoins for approximately $1.1 billion and used $750 million of the proceeds to fully repay its bitcoin-backed loans.
This reduces one of the immediate sources of credit pressure, but does not eliminate the obligation to the convertible bondholders. The company has not announced that it will specifically use its remaining bitcoins to make the November 30 payment.
Profit is primarily tied to market valuations
For the third quarter, Trump Media reported revenue of $2.97 million and net profit of approximately $409.7 million. However, the financial result was primarily supported by unrealized gains on digital assets and securities. Adjusted EBITDA, which excludes certain non-cash items, was negative at $12.3 million.
The company used $28.4 million in cash for its operations during the first nine months of the year. Thus, the value of bitcoin remains crucial to its balance sheet, even though its core media business generates relatively limited revenue.
Management seeks a combination of cash and credit
“Our current view is to use a combination of available funds and credit to repay the bonds,” interim Chief Executive Officer Kevin McGurn said during the investor call. He added that Trump Media is not currently inclined to issue additional shares and wants to retain as much of its bitcoin assets as possible in order to continue its yield strategy and wait for the asset to recover.
According to the latest market data, bitcoin is trading at around $65,331, while Trump Media shares are around $4.64. At these levels, selling digital assets would provide liquidity but reduce the company's bitcoin reserves, while new equity financing would dilute existing investors' holdings.
Sources: ft.trib.al, investing.com, coindesk.com