Core Scientific, one of North America’s largest crypto mining companies, recently filed an updated restructuring plan in its Chapter 11 bankruptcy case.
The comprehensive plan involves major crypto-native companies Anchorage Digital and Bitmain taking equity stakes in Core Scientific.
Core Scientific restructuring plan
According to the restructuring plan, Core Scientific has reached an agreement in principle, subject to final documentation and court approval, for Bitmain to acquire 27,000 S19j XP bitcoin miners from Core Scientific.
The proposed deal includes an exchange of $23.1 million in cash paid in installments and $53.9 million paid in the form of new Core Scientific equity shares at plan value. This arrangement allows Core Scientific to acquire new miners without significant cash outlay.
The proposed plan also includes Anchorage Digital providing a $150 million equity line of credit to Core Scientific after it emerges from Chapter 11 bankruptcy protection. This equity line would give Core Scientific access to additional capital without further diluting existing shareholders.
Core Scientific filed for Chapter 11 bankruptcy protection in December 2022 amid tumbling bitcoin prices, rising energy costs, and disputes with creditors like Celsius Network. The company operates extensive crypto mining facilities in Georgia, Kentucky, North Carolina, North Dakota, and Texas.
Reducing debt and creditor objections
According to the documents, Core Scientific aims to reduce its debt load, which totaled over $1 billion across various financing arrangements and convertible notes, by $30-105 million through the proposed deals with Anchorage Digital and Bitmain.
The plan also details a minimum $55 million equity rights offering for existing Core Scientific shareholders on emergence. B. Riley Financial, the company’s largest unsecured creditor, has agreed in principle to backstop this rights offering and agreed to reduce outstanding balances by $6.3 million. The plan additionally involves B. Riley providing a $25 million delayed draw term loan to Core Scientific as it exits bankruptcy.
However, some Core Scientific creditors have objected to parts of the plan, contending their claims are undervalued, and the deadline for filing objections is set for Oct. 3. The restructuring plan aims to maximize recovery for all stakeholders while ensuring the continuation of Core Scientific’s business operations.
If confirmed, the deals with Anchorage Digital and Bitmain would allow crypto-focused investors to gain exposure to Core Scientific’s extensive mining infrastructure while shoring up the bankrupt firm’s capital structure.
Confirmation of the whole plan remains pending based on creditor acceptance and court approval.
