Core Scientific Secures Approval to Emerge and Re-list on Nasdaq by January 2024

Core Scientific, a provider of blockchain computing data centers and software solutions, announced that the United States Bankruptcy Court for the Southern District of Texas has confirmed the Chapter 11 plan of reorganization.

With the Bankruptcy Court’s approval, Core Scientific is now set to emerge and re-list on the Nasdaq by the end of January 2024.

Exiting Bankruptcy

Under the terms of the plan, shareholders, as of the expected record date of January 23, 2024, will be granted shares of Core Scientific’s new common stock and warrants, making up roughly 60% of the company’s new equity.

This includes the exercise of warrants given to existing shareholders and the issuance of new shares through the equity rights offering.

If all warrants are exercised in cash and the proceeds are utilized to settle debts, the company’s existing debt would be completely repaid, marking a reduction of approximately $1 billion from its debt balance before the plan, according to the official press release .

Commenting on the development, Adam Sullivan, Core Scientific’s Chief Executive Officer, said,

“Today’s plan confirmation is a defining moment in our reorganization; we’re poised to emerge by the end of this month as an even stronger company, with a highly motivated team that is aligned for success. With demand for Bitcoin and high-value compute continuing to rise, we look forward to creating value for our shareholders as we execute our growth plan, de-lever our balance sheet, and deliver superior efficiency at scale.”

The reorganization plan includes the equitizing of around $400 million in secured and unsecured claims while reducing annual debt service by approximately $60 million.

Additionally, the infusion of $95 million in new-money exit capital, derived from an oversubscribed $55 million equity rights offering and $40 million in new-money financing through the $80 million Exit Facility provided by certain Convertible Noteholders, is a pivotal element among other aspects, as per its official document .

Core Scientific’s Reorganization Journey

Core Scientific was among the leading Bitcoin miners in terms of computing power that sought bankruptcy protection in the Southern District of Texas bankruptcy court due to the challenges faced by the industry during the crypto winter in 2022.

The Bitcoin miner’s reported liabilities ranged between $1 billion and $10 billion, while it had a creditor base estimated to be between 1,000 and 5,000, with the most substantial unsecured claim originating from the investment bank B. Riley.

The company’s exit from bankruptcy coincided with a rise in Bitcoin prices to $43,000, driven by renewed investor interest following the SEC’s approval of spot ETFs in the US and anticipation of the upcoming BTC halving.

Additionally, the approval of the reorganization plan follows the company’s recent announcements of fully settling its DIP financing and successfully concluding an oversubscribed $55 million Equity Rights Offering.