Core Scientific Launches $400 Million Senior Notes Offering
Core Scientific, a Bitcoin mining company based in Texas, has announced the pricing of its increased offering of $400 million in 3.00% convertible senior notes maturing in 2029. The initial offering was set at $350 million but was expanded due to favorable market conditions.
Scheduled to settle on August 19, 2024, these notes will be privately issued to qualified institutional buyers, with initial purchasers given the option to acquire an additional $60 million in notes.
According to the official announcement, these unsecured notes will accrue interest semi-annually and will mature on September 1, 2029, unless they are converted, redeemed, or repurchased beforehand. Core Scientific will settle conversions by providing cash, shares of its common stock, or a combination of both, at the company’s discretion. The initial conversion rate is set at 90.9256 shares of common stock per $1,000 principal amount of notes, translating to an initial conversion price of approximately $11.00 per share.
The company anticipates raising around $386.6 million from this offering, with the potential to reach $445.0 million if additional notes are sold. The proceeds will be used to repay $61.2 million in outstanding loans and $150.0 million in senior secured notes due in 2028, with any remaining funds allocated for general corporate purposes, including working capital, expenses, and acquisitions.
Bankruptcy and Recovery
Core Scientific filed for bankruptcy protection in December 2022 following a downturn in the crypto market and the collapse of its partner Celsius. After a bankruptcy court approved its Chapter 11 restructuring plan in January, the company reduced its debt by $400 million and resumed operations. Since its return to the stock market, Core Scientific’s share price has surged by 145%, reaching $8.46 on the Nasdaq.
A pivotal shift towards artificial intelligence (AI) has been essential for the company. Recently, Core Scientific entered into a significant agreement valued at $6.7 billion with CoreWeave, a startup backed by Nvidia, which supplies key AI model technology. Core Scientific will provide an additional 112 megawatts of computing power to enhance CoreWeave’s operations.
Earlier this month, CEO Adam Sullivan stated, “We’ve seen tremendous growth since our emergence in January and have been laser-focused on developing best-in-class digital infrastructure. This infrastructure advantage has allowed us to diversify revenue and reallocate certain facilities to address the growing need for the type of technology required for AI.”
