Core Scientific hopes for January exit from Chapter 11 bankruptcy

By Sarah Lizee

Olympia, Wash., Dec. 4 – Core Scientific, Inc. is hoping to emerge from Chapter 11 bankruptcy by the end Jan. 5, according to a Monday press release.

In a presentation summarizing its plan and disclosure statement, the company said common shareholders are expected to receive $1.08 per share of pre-exchange value based on current assumptions. Existing equity will receive new common shares and two tranches of warrants.

Convertible noteholders are set to receive original par plus accrued interest and accretion in the form of new secured notes, new secured convertibles and new common shares.

According to the presentation, April convertible noteholders are expected to receive $1.628 of value for every $1 original par face amount, while the August convertible noteholders are expected to receive $1.201 of value for every $1 original par face amount.

As a reminder, the company’s recapitalized balance sheet will include a $55 million equity rights offering and an $80 million exit facility, of which $40 million is new money.

The company’s net debt at emergence is expected to be $709 million, consisting of the exit facility, new notes, new convertibles, miner equipment loans and other secured debt.

Core Scientific said its new debt schedule reflects less than $50 million of required paydowns through year-end 2025.

The $55 million equity rights offering under the plan is expected to occur at $0.34 per share. Common shareholders as of Nov. 16 have a right to participate.

At emergence, existing shareholders will own 49% of the company, convertible noteholders will own 33%, other creditors will own 11% and Bitmain will own 7%. This does not reflect the impact of the conversion of the new convertible, the exercise of the tranche 1 or 2 warrants, or the issuance of shares to management under the management incentive plan.

The U.S. Bankruptcy Court for the Southern District of Texas will consider confirmation of the plan at a hearing scheduled for Dec. 22.

Core Scientific is an Austin, Tex.-based Bitcoin mining company that filed bankruptcy on Dec. 21, 2022 in the U.S. Bankruptcy Court for the Southern District of Texas under Chapter 11 case number 22-90341.

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