- Core Scientific has received permission from the bankruptcy court to borrow up to $70 million from B. Riley.
- The new credit facility will replace an existing one that was extended by B. Riley in December 2022.
The U.S. Bankruptcy Court for the Southern District of Texas has granted Core Scientific the green light to go ahead with a $70 million credit facility from middle market investment bank B. Riley.
The loan will go toward replacing an existing credit facility that the bankrupt crypto miner had secured from the investment bank in December 2022.
Permission granted after emergency hearing
Core Scientific, the popular crypto miner that filed for bankruptcy in December 2022, had requested the bankruptcy court to schedule an emergency hearing to allow the replacement of the credit facility with B. Riley.
According to the court filing, the mining firm intends to use the new credit line to settle the existing debtor-in-possession (DIP) facility with the investment bank.
The filing further revealed that the replacement DIP facility will provide an aggregate principal amount of $35 million. The loan will be made on an interim basis in a single borrowing. Additionally, the remaining amount from the original $70 million will be available in one or more borrowings.
According to Core Scientific:
“The Replacement DIP Facility is the result of extensive marketing and hardfought negotiations with numerous potential lenders.”
Moreover, the company’s shareholders are reportedly on board with the plan to replace the existing credit facility in favor of the new arrangement.
New credit line to provide liquidity during chapter 11 proceedings
The filing further read:
“The Debtors (Core Scientific) require access to the Replacement DIP Facility to pay off the Original DIP Facility and to ensure they have sufficient liquidity to operate their businesses and administer their estates in the ordinary course for the duration of these chapter 11 cases.”
The miner believed that the replacement DIP facility will provide up to 15 months of runway and significant flexibility since it has no plan-related milestones. It is not conditioned on seeking approval of any specific chapter 11 plan.
It reportedly contained economic terms that are reasonable and superior to those provided under the Original DIP Facility.