By Michael Scott
Texas-based crypto mining firm Core Scientific is edging closer to ending the 13-month bankruptcy journey. The Austin-headquartered Bitcoin miner revealed in a Tuesday, January 16 statement that its restructuring journey is ending with its emergence scheduled for January 23.
Core Scientific revealed in Tuesday’s statement that the court approved its emergence from bankruptcy. The statement added that the crypto mining firm will relist the CORZ shares on the Nasdaq, marking the conclusion of its 13-month restructuring process.
Core Scientific Eyes Relisting on Nasdaq
The January 16 statement disclosed the approval of the reorganization plan as approved by the Southern District bankruptcy court in Texas. It targets Tuesday’s emergence and relisting on the Nasdaq on Wednesday, January 24.
The terms enshrined in the Chapter 11 plan require the existing shareholders to retain 60% of their shareholding of the Core Scientific. The plan further trims millions of debt from the crypto miner’s balance sheet. The terms target providing full recovery to all creditor classes.
Judge Christopher Lopez of the Southern District bankruptcy court in Texas indicated that the hearing targets providing tremendous recovery to the unsecured credentials and equity holders. Also, the judge observed that the emergence of the crypto mining firm under the plan will help preserve over 240 employment opportunities.
Core Scientific chief executive Adam Sullivan lauded the approval of the restructuring plan as a critical milestone in reorganizing the firm. The executive indicated that the mining firm is poised to realize emergence as a stronger company, leveraging the input from the highly motivated team aligned to deliver its success.
Core Scientific Overcomes Bankruptcy Shackles
Sullivan added that Core Scientific staff is motivated to create value for its shareholders, given the rising demand for Bitcoin. Besides addressing the increasing demand for high-value computing, the executive praised his team’s readiness to execute the growth plan efficiently. He added that the employees are conscious of the objective to de-lever the balance sheet.
The news of exiting bankruptcy is a positive development for the US mining segment, given that Core Scientific is among the largest crypto miners. Its estimated production in 2023 exceeds 13,700 self-mined capacity and another 5500 Bitcoins from the co-located miners.
The news of Core Scientific shaking off the bankruptcy shackles is positive, ending the 13-month struggle with the financial crisis. The Bitcoin miner plunged into bankruptcy owing to the prolonged crypto winter aggravated by the crypto exchange FTX implosion in November 2022.
Core Scientific plunged into bankruptcy following the rising energy prices and difficulty experienced in mining. The factors aggravated bad dent lending to the now bankrupt Celsius.
Core Scientific indicated that the restructuring plan became possible owing to the substantial uptrend realized by Bitcoin since it filed for Chapter 11 protection in December 2022. Besides higher hash prices, CoinGecko data shows that Bitcoin has rallied over 101% in the past year.
Core Scientific Exiting Bankruptcy
Meanwhile, Core Scientific confirmed in a January 8 announcement concluding a $55-million equity financing round to regain solvency. The firm admitted that the round saw oversubscription owing to the total repayments realized on the previous debtor-in-possession financing amounts.
The round positions Core Scientific to emerge with enhanced liquidity to execute its growth plans. In its November 2023 financial statement, Core Scientific indicated $2.3 billion in assets against $1.8 billion in equity and $559 in liabilities.
In a January 4 statement, Core Scientific confirmed the prepayment to the outstanding DIP balance advanced by B Riley Financial. Besides the prepayment to the lender, Core Scientific indicated that $35 million was available and accessible for the firm as earlier agreed.
The crypto mining firm plans to emerge from the year-long bankruptcy with a net debt of $709 million besides the $791 million of shareholders equity.
The firm’s shareholders are scheduled to receive shares in a 25:1 ratio that offers them $1.08 per pre-exchange share. Noteholders receive $1.628 each $1 face value for their convertible claims due in April. Others whose notes carry an August due date will realize $1.201 to $1 face value.
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