ProCap Financial, Inc. Debt Disclosure
Note 8. Debt
In connection with the execution of the Business Combination Agreement, on June 23, 2025, certain qualified investors (the “Convertible Note Investors”) each entered into a subscription agreement (collectively, the “Convertible Note Subscription Agreements”), with ProCap and CCCM. On December 5, 2025, upon the Closing of the Business Combination, the Convertible Note Investors purchased convertible notes issued by the Company (“Convertible Notes”) in an aggregate principal amount of $235,000,000, for an aggregate purchase price equal to 97% of the aggregate principal amount of the Convertible Notes. The Convertible Notes have a conversion rate of shares per $1,000 equal to an approximately $13.00 conversion price, zero interest rate, maturity of up to 36 months, and are collateralized by cash, cash equivalents and certain Bitcoin assets. Under the indenture associated with the Convertible Notes, the Company has up to 30 days from the closing of the Business Combination to 1.0:1.0 times collateralize the Convertible Notes using a mix of Bitcoin (with Bitcoin being valued at 50% for collateral calculation purposes), cash and cash equivalents (with cash and cash equivalents being valued at 100% for collateral calculation purposes). This note has an effective interest rate of 9.09%. U.S. Bank National Trust, N.A. (“US Bank”) serves as collateral agent and trustee with regard to the Convertible Notes and associated indenture and security arrangements. As of December 31, 2025, the Company had $145,239,552 on deposit at US Bank.
Each Convertible Note Investor may, at its option, convert each $1,000 principal amount of their Convertible Note into a number of shares of common stock equal to the conversion rate in effect on the conversion date, cash, or a combination of common stock and cash at any time from the issue date until the close of business on the second scheduled trading date immediately before the maturity date. The embedded conversion of the Convertible Notes meets the criteria for bifurcation and is recognized as a separate derivative instrument.
If an event of default occurs, then the principal amounts on all the Convertible Notes then outstanding will immediately become due and payable.
The table below summarizes the outstanding Convertible Notes as of December 31, 2025, including the effects of discounts and debt issuance costs:
| December 31, 2025 | ||||
| Convertible Notes due 2028 | $ | 235,000,000 | ||
| Discount, net (1) | (11,387,249 | ) | ||
| Debt issuance costs, net (2) | (9,440,843 | ) | ||
| Convertible Notes, net | $ | 214,171,908 | ||
| (1) | Discount as of December 31, 2025 consisted of $7,050,000 of original issue discount and $4,629,230 for the fair value of the embedded derivative less accumulated amortization of $291,981. |
| (2) | Debt issuance costs as of December 31, 2025 consisted of $9,682,916 in debt issuance costs less accumulated amortization of $242,073. |
The table below reflects the principal amount of loan maturities due over the next five years as of December 31, 2025:
| 5-Year Loan Maturities Fiscal Year | ||||||||||||||||||||||||
| 2026 | 2027 | 2028 | 2029 | 2030 | Total | |||||||||||||||||||
| 2028 Convertible Notes | $ | $ | $ | 235,000,000 | $ | $ | $ | 235,000,000 | ||||||||||||||||
The table below presents the disaggregation of interest expense for the period from June 17, 2025 (inception) through December 31, 2025:
For the period from June 17, 2025 (inception) through December 31, 2025 | ||||
| Debt discount amortization | $ | 291,981 | ||
| Debt issuance cost amortization | 242,073 | |||
| Interest expense | $ | 534,054 | ||
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.