Telegram’s ambitions for a lucrative initial public offering (IPO) within the next two years are now in serious jeopardy following criminal charges brought against the company’s chief executive, Pavel Durov.

According to exclusive documents seen by the Financial Times, the Telegram CEO currently detained in France has spent the better part of the last year turning down offers from potential investors who valued the Dubai-based messaging company at over $30 billion.

Telegram’s 2023 financial statements reveal that the company generated $342 million in revenue last year but suffered an operating loss of $108 million. After taxes, total losses amounted to approximately $173 million.

Pavel Durov is under formal investigation in France as part of an inquiry into organized crime activities on the messaging platform, according to Paris prosecutors. While he has not been detained, he is under judicial supervision and required to post a €5 million bail.

Adding to the company’s challenges, Telegram’s array of traditional and digital financial instruments have not yielded significant returns. The company has raised about $2.4 billion through debt financing that is due to mature in 2026. This includes a $1 billion bond offering in 2021 with Abu Dhabi state funds among the investors, as well as $330 million raised earlier this year in an oversubscribed issue.

Durov has also personally invested at least $64 million in Telegram bonds, according to the company’s 2023 financial statement. However, the price of Telegram’s bonds has dropped by nearly 10 percentage points, now trading at around 87 cents on the dollar with a yield of over 16 percent, down from around 96 cents prior to Durov’s arrest at a Paris airport on Aug. 24.

The crashing of Telegram’s bond price after Durov’s arrest complicates the ability of senior bondholders to convert their unsecured debt into equity at a discount prior to an IPO. If a listing takes place before March 2026, senior bondholders would be given an opportunity to convert their debt into equity at a discounted rate.

“Would investors buy into an IPO if they are not sure if Telegram is a pariah? I am not sure. Bond investors would face a similar dilemma,” one bondholder was quoted in the Financial Times, speculating that private equity investors may take this as an opportunity to value the company at a steep discount. “In either case, I would not expect a quick recovery of the bonds.”

The matter is further complicated by the CEO’s own multi-billion dollar cryptocurrency fortune. In the wake of Durov’s arrest, the price of Toncoin has tumbled more than 20% over the last week.

As part of the revealed documents, some of Telegram’s multimillion-dollar financial losses were offset by the company’s digital assets, which total nearly $400 million. In 2024, the company sold TON for over $244 million in cash, mainly to individual and institutional Russian investors.

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