Core Scientific drops 10% after $400 million convertible senior note offer

Stephen Katte3 hours agoCore Scientific drops 10% after $400 million convertible senior note offerCore Scientific stock has dropped to $8.46 per share on the Nasdaq following an announcement of offering convertible senior notes to help settle debts.907 Total views17 Total sharesListen to article 0:00NewsOwn this piece of crypto historyCollect this article as NFTCOINTELEGRAPH IN YOUR SOCIAL FEEDFollow ourSubscribe onShares in Bitcoin miner Core Scientific dropped just over 10% following its announcement of offering up to $400 million in convertible senior notes to investors, up from the initial $350 million a day earlier.

A senior convertible note is a type of debt security that can be converted into equity at a later date and accrue interest payments for the investor over time. It’s a form of debt for the company.

Core Scientific"s stock has dropped 10% to $8.46 per share on the Nasdaq. However, after hours, it recovered by 1% to $8.55.Core Scientific announced it would offer $400 million in convertible senior notes, its  Source: Google Finance

In the Aug. 14 media release, the miner announced the $400 million in notes would be issued in a private offering to qualified institutional buyers only.

“Investors can choose to hold the senior, unsecured debt until maturity or convert it into shares. Interest will be paid out semi-annually,” the company said.

The offering could also include a stipulation that purchasers can buy an additional $60 million in notes that will mature on Sept. 1, 2029, unless earlier converted, redeemed, or repurchased. Settlement is scheduled for Aug. 19.

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According to Core Scientific, the net proceeds will repay in full “outstanding loans under its credit and guaranty agreement entered into on Jan. 23, 2024 and redeem all of its outstanding senior secured notes due 2028.”

“Core Scientific intends to use the remaining net proceeds from the offering for general corporate purposes, including working capital, operating expenses, capital expenditures, acquisitions of complementary businesses, or other repurchases of its securities,” the firm said.

The miner expects to raise $386.6 million in total, or $445.0 million, if investors choose to purchase additional notes.Pushing through bankruptcy woes

In January, Core Scientific emerged from bankruptcyafter the bankruptcy court for the Southern District of Texas confirmed its reorganization plan, allowing the company to scrap $400 million in debt and continue operating.

A combination of the crypto winter, rising energy prices, increased mining difficulty, and bad debt lent to crypto firm Celsius, led Core Scientific to file for bankruptcy in December 2022.Source: Core Scientific

The miner reported a net loss of $804.9 million for its second quarter of 2024, compared to a net loss of $9.3 million for the same period in the prior year, according to its Aug. 7 financial report.

However, the company is still in a relatively strong position. Year to date, Core Scientific says it has mined 5,052 Bitcoin (BTC), worth over $300 million at current prices. It also has plans for long-term contracts that could net them $6.7 billion over 12 years. 

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