B. Riley Offers Core Scientific $72M

According to a press release, B. Riley made the offer in an open letter addressed to Core Scientific shareholders and lenders, seeking to provide liquidity and avoid a “potential unnecessary and value destructive bankruptcy proceeding.”

Recall that Core Scientific disclosed in October that it was running out of cash reserves and was considering bankruptcy if its financial condition did not improve by the end of the year.

The distressed company said its operations had been greatly affected by the prolonged bear market, a spike in energy costs, increased completion, and ongoing legal proceedings with bankrupt crypto lender Celsius Network.

Core Scientific said it would refrain from making debt payments due in late October and early November to curtail its financial issues. The miner planned to explore several alternatives, including hiring strategic advisors, raising additional funding, and restructuring its current capital structure.

In light of Core Scientific’s financial woes, B. Riley, one of its largest creditors, has offered to provide $72 million in new financing to help the company escape bankruptcy and continue preserving value for its stakeholders.

“To that end, B. Riley has proposed to Core Scientific’s Board of Directors that it would provide $72 million in new, non-cash pay financing on favourable terms, providing more than two years of runway for the Company to achieve profitability,” B. Riley said.

The financial services company called its offer a “far superior approach for all constituents,” adding that bankruptcy would deplete Core Scientific’s limited resources.

B. Riley Says Core Scientific’s Issues Are Self-Imposed

Furthermore, B. Riley argued that most of Core Scientific’s issues are self-imposed and a result of an “ill-conceived strategy.” The poor strategy has seen the mining firm build more power facilities and expand miners while failing to sell its Bitcoin holdings and never hedging prices.

Nevertheless, the lender believes the issues can be fixed with transparent discussions and ongoing participation with Core Scientific’s creditors and equity holders.

~ By William A. Frederick ~