Diversified financial services platform B. Riley Financial has sent an open letter to Core Scientific shareholders and lenders. Being one of its largest creditors, B. Riley undertook to restructure the debt of this company. Funding to the tune of $72 million will prevent the mining giant from going bankrupt, estimates B. Riley. The letter calls on the mining company’s Board of Directors to act quickly to find a solution beneficial to all stakeholders.
B. Riley will finance Core Scientific to avoid bankruptcy
As a reminder, mining company Core Scientific announced the suspension of all principal and interest payments falling due in October and early November to several lenders on October 26, 2022. It also suggested various options including bankruptcy. The company’s common shares fell 86% with one share now trading at $0.15.
However, B. Riley, his biggest creditor, wants to avoid bankruptcy at all costs. In letter to shareholders and lenders to Core Scientific, B. Riley announces that she intends to restructure the company’s debt and provide it with the necessary liquidity. The financial services company then offered financing of $72 million on favorable terms. The mining giant will have two years of leeway to achieve profitability.
The rise in the price of bitcoin beneficial for society?
According to B. Riley’s analysis, Core Scientific took out loans worth $300 million worth of equipment when the Bitcoin price was significantly higher than it is today. She points out that these debts were incurred in the wrong way. This is what led this mining company to sell all of its inventory at a loss, i.e. 9,618 bitcoins in April 2022.
According to Lucas Pipes, an analyst at B. Riley, bitcoin’s price at $18,000 can generate approximately $140 million in EBITDA at Core Scientific. A $1,000 rise in bitcoin price could add up to $20 million in EBITDA. Thus, B. Riley estimates that if the price of bitcoin returns to $24,500, this company will generate up to $275 million in adjusted EBITDA in order to service creditors.
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