In the ongoing bankruptcy proceedings, the mining company Core Scientific reached an agreement with investment bank B. Riley to provide a loan of $70 million.
The firm sought court approval of the loan in the Southern District of Texas Bankruptcy Court in Houston. The financing would allow Core Scientific to pay off an existing $75 million line of credit opened by major shareholders of the company.
According to the company, the funds would enable it to sustain operations for 15 months and provide it with \”significant flexibility\”.
The loan from B. Riley is secured by \”all property and assets\” of the borrower, including the mining operation in North Carolina. The annual rate is 10%, the maturity is one year with a three-month deferment.
In October 2022, Core Scientific warned of the potential depletion of liquidity reserves in the coming months.
In December B. Riley proposed debt financing of $72 million to avoid bankruptcy. The bank at that time was already one of Core Scientific’s largest creditors.
A few days later the mining company filed for insolvency. The company’s restructuring plan was based on an agreement with holders of 50% convertible notes. The latter agreed to provide additional financing so Core Scientific could continue its operations.
The company noted that the funds from B. Riley are not tied to any phase of the original restructuring plan.
\”The loan also contains reasonable economic terms that are more favorable than those under the previous credit line,\” said Core Scientific.
Earlier in November, one of the shareholders filed a class-action lawsuit against the company, alleging that Core Scientific concealed the adverse financial factors that had emerged.