Core Scientific trades debt for equity, reduces $260M in debt

Bitcoin miner Core Scientific It has announced a mandatory changeover to super-secured convertible notes by 2029.

According to the July 8 announcement, the conversion will involve an exchange of approximately 45 million shares of Core Scientific common stock for $260 million in convertible debt.

Compulsory conversion was initiated in 2010. On July 5, Core stock traded above $2.1 billion based on daily volume weighted average price (VWAP) for 20 consecutive trading days. The notes will convert into common stock on July 10. Holders receive shares based on the conversion price and receive cash for the fractional shares they are entitled to.

The Core Secured Convertible Notes offer two interest options: 10% per annum payable in full in cash, or 6% in cash and 6% per annum in shares, calculated based on the 20-day average trading price.

As of this writing, Core's shares (CORZ) are trading at $10.14 on the Nasdaq, down 1.5%. In the last six months, however, the stock has gained 194.2%.

Core scientific bankruptcy

The convertible notes were issued as part of Core's bankruptcy proceeding. In January, Core Scientific emerged from bankruptcy after its reorganization plan was upheld by the Bankruptcy Court for the Southern District of Texas.

Under the plan, noteholders received $1.628 per $1 face value for notes due in August and $1.628 per $1 face value for notes due in April.

“turn into […] It highlights the significant progress we have made since emerging from bankruptcy earlier this year,” Core CEO Adam Sullivan said in a statement.

Unsecured creditors

Core Scientific announced the termination of its contingency payment obligation to unsecured creditors.

Under the terms of Core's Chapter 11 plan, the company originally estimated it owed $3 million to unsecured creditors. The mechanism is designed to provide additional compensation to general unsecured creditors if the company's inventory does not meet performance benchmarks.

Core shares' performance over the past few weeks has eliminated the obligation, meaning the company no longer has to make additional payments to general unsecured creditors.

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