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Court Permits Core Scientific to Borrow $70M to Replace an Existing Loa

Riley is already a Core Scientific creditor and attempted to supply payments before the Bitcoin miner filed for bankruptcy.

The Southern District of Texas bankruptcy court has granted Core Scientific permission to borrow up to $70 million from investment bank B. Riley, one of the company’s largest creditors. The loan would repay the Bitcoin miner’s current debtor-in-possession (DIP) finance loan, which B. Riley also provided.

At the start of its Chapter 11 bankruptcy proceedings, Core Scientific indicated its desire to replace its initial DIP loan in advance, claiming it would find better terms with greater flexibility. The corporation intends to replace the initial loan with $35 million, with the remaining cash accessible through one or more further borrowings.

The new loan is the product of “intensive marketing and hard-fought negotiations with multiple possible lenders,” according to Core Scientific’s petition. The measure has been accepted by the creditors’ committee and an ad hoc shareholders’ committee. As a result, core Scientific will get “adequate cash to maintain their companies and administer their estates in the regular course for the duration of these Chapter 11 proceedings,” according to the agreement.

In mid-December, B. Riley gave Core Scientific $72 million in funding to keep the firm afloat. However, the bank blamed Core Scientific’s financial difficulties on “an aggressive, ill-conceived strategy” in its offer letter.

Core Scientific declared bankruptcy on December 21.

On December 23, the firm won approval from the court to take out a $37.5 million DIP loan from its creditors at 10% annual interest, with an additional $37.5 million to be made available in January. At the time, a creditor’s representative told Reuters that stakeholders “believe” in the firm.

Core Scientific’s financial difficulties were revealed in October. In addition to high power costs and low Bitcoin prices, the company’s financial health suffered when Celsius failed to pay its payments after declaring bankruptcy.

 

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