Core Scientific gains access to $37.5 million loan from creditors

A bankruptcy court approved Core Scientific’s access to a loan of $37.5 million from existing creditors. The funds will be used to address liquidity problems, according to Reuters.

On December 21, one of the largest US mining companies filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. The firm said it would continue operations and expects to reorganize the business on the basis of agreements with holders of 50% of the total value of the convertible notes.

According to the statement, the group of creditors agreed to provide the debtor with a $56 million credit line and approved the allocation of a $19 million syndicated loan.

According to Reuters, the company intends to file an application for access to the remaining portion of the debt financing in January 2023.

In October, Core Scientific warned of a possible depletion of cash reserves and their equivalents by year-end. The company cited the decline in the price of Bitcoin, higher electricity tariffs and growth in hash rate. Pressure on liquidity was also driven by legal costs and the bankruptcy of the hosting’s largest client — Celsius Network.

In December, one of the major creditors — B. Riley — proposed allocating $72 million on ‘favorable terms’ to stave off bankruptcy. The plan envisaged a particular scheme for creditor payment deferrals.

For the third quarter the company recorded a loss of $434.8 million. Since the start of the year the cumulative figure stood at $1.71 billion. At period end assets were $1.4 billion and liabilities $1.33 billion.

In November, one of the shareholders filed a class-action lawsuit against Core Scientific. He argued that the company concealed adverse financial factors.

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