Lender B. Riley Financial offers Core Scientific $72 million to avert bankruptcy

The B. Riley Financial platform предложила Core Scientific financing of $72 million \”on favorable terms\” to help the mining company avert bankruptcy.

Co-founder and co-CEO of B. Riley, Bryant Riley, in an open letter to Core Scientific shareholders noted that the funds would keep the company running for more than two years.

In October, the mining firm warned of possible depletion of liquid reserves by year-end. The Bitcoin miner did not rule out filing for bankruptcy.

B. Riley is one of the company’s largest creditors — the amount of outstanding debt to Core Scientific stands at $42 million of a total around $300 million.

According to Riley, these debts resulted from an ill-conceived strategy aimed at further expanding capacity and the mining fleet.

He added that the company did not sell Bitcoin and did not hedge price risks. As a result, during 2022 Core Scientific liquidated 9,618 BTC with \”huge losses.\”

On October 26, the mining firm announced a suspension of payments to several creditors of its senior debt and interest in October and November.

“Bankruptcy is not the way out and would be a bearish disservice to the company’s investors. It would destroy value for shareholders, reduce potential recoveries for creditors, deplete its limited resources and create enormous uncertainty for all stakeholders. Moreover, bankruptcy is by no means necessary,” Riley said.

The financial firm is prepared to earmark $40 million to repay debts. The remainder of the $72 million will be provided on condition that payments to creditors (including B. Riley) are paused until Bitcoin trades above $18,500. Once prices exceed this level, the free cash flow will be distributed among them.

Riley stressed that the offer is designed to provide the miner with sufficient liquidity and does not contemplate reducing the amount creditors can recover.

For the third quarter, Core Scientific posted net loss of $434.8 million. For the previous three months, the loss amounted to $861.7 million.

The largest shareholders of the company are the investment giants BlackRock, Vanguard Group and Invesco.

В сентябре Vanguard дополнительно купила 8,2 млн акций майнера, а Invesco Capital Management — 7,3 млн.

14 декабря, в день публикации письма Райли, котировки Core Scientific подскочили за торговую сессию почти на 70% — до $0,25. На момент написания акции торгуются на уровне $0,38, прибавив еще около 50%.

As noted, Core Scientific получила публичный статус через SPAC in January 2022.

In July, the company signed an agreement with B. Riley for the sale of its shares worth $100 million.

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