Core Scientific, a Texas-based Bitcoin mining company, has recently announced the pricing of an increased offering of $400 million in 3.00% convertible senior notes due in 2029. Originally set at $350 million, the offering size was upsized due to favorable market conditions. The notes are scheduled to settle on August 19, 2024, and will be issued privately to qualified institutional buyers. Additionally, the initial buyers will have the option to acquire an additional $60 million in notes.
According to the official press release, the unsecured notes will accrue interest semi-annually and mature on September 1, 2029. Core Scientific will settle conversions by paying cash, shares of its common stock, or a combination of both, at its election. The initial conversion rate is set at 90.9256 shares of common stock per $1,000 principal amount of notes, with an initial conversion price of approximately $11.00 per share.
Core Scientific expects to raise around $386.6 million from the offering. This amount could potentially reach $445.0 million if additional notes are purchased. Once the offering is complete and funds are raised, the company plans to allocate the proceeds towards various purposes, including repaying outstanding loans, senior secured notes, and general corporate needs like working capital, expenses, and acquisitions.
After filing for bankruptcy protection in December 2022 following a crypto market downturn and the failure of a partner, Celsius, Core Scientific underwent a Chapter 11 restructuring plan in January. This restructuring allowed the company to shed $400 million in debt and continue its operations. Since returning to the stock market, Core Scientific’s share price has increased by 145% to $8.46 per share on the Nasdaq. The company’s pivot to artificial intelligence (AI) has been cited as a crucial factor in its recovery and growth.
One of Core Scientific’s strategic moves in the AI sector was a significant agreement valued at $6.7 billion with CoreWeave, a startup supported by Nvidia and a leading chipmaker. This partnership involves Core Scientific providing an additional 112 megawatts of computing power to enhance CoreWeave’s operations. CEO Adam Sullivan highlighted the company’s focus on developing top-tier digital infrastructure, stating, “We’ve seen tremendous growth since our emergence in January and have been laser-focused on developing best-in-class digital infrastructure.”
Core Scientific’s announcement of the increased offering of $400 million marks a significant milestone for the company in its recovery and growth journey. The strategic allocation of funds and focus on AI partnerships demonstrate a forward-looking approach towards innovation and sustainable development in the cryptocurrency and technology sectors.
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