Core Scientific has received permission from the bankruptcy court for the Southern District of Texas to obtain a loan of up to USD 70 million from investment bank B. Riley, one of the company’s largest creditors. The loan would be used to pay off the bankrupt Bitcoin miner’s existing debtor-in-possession (DIP) financing loan, which also came from B. Riley.
Core Scientific stated its intention to replace its original DIP loan early at the start of its Chapter 11 bankruptcy proceedings, saying it would find better terms with more flexibility. The company intends to use ISD 35 million to replace the original loan, with the remaining funds to be made available in one or more additional loans.
The replacement loan “is the result of extensive marketing and close negotiations with numerous potential lenders,” claims Core Scientific in its petition. The creditors’ committee and an ad hoc committee of shareholders have approved the measure. The loan will ensure that Core Scientific has “sufficient liquidity to operate its business and manage its assets in the ordinary course of these Chapter 11 cases.”
#Bitcoin miner Core Scientific (#CORZ) has agreed to borrow $70 million from investment bank B. Riley to replace existing hardware and keep the company running while it goes through Chapter 11 bankruptcy. pic.twitter.com/JPRnUIXRAo
— MoonDefi (@moondefi1) January 31, 2023
B. Riley had offered Core Scientific $72 million in financing in mid-December in an effort to maintain the company’s solvency. The bank attributed Core Scientific’s financial problems to “an ill-conceived and aggressive strategy” in its offer letter.
Core Scientific filed for bankruptcy on December 21.
On December 23, the company received court permission to obtain a $37.5 million DIP loan from its creditors at 10% annual interest, with another $37.5 million available in January. A representative of the creditors then told Reuters that the interested parties “have faith” in the company.
Core Scientific’s financial problems became known in October. In addition to high electricity prices and low Bitcoin (BTC) prices, the company’s financial well-being took a hit when Celsius stopped paying its bills after filing for bankruptcy.
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