Core Scientific, a Bitcoin mining company based in Texas, has recently priced an increased offering of $400 million in 3.00% convertible senior notes due in 2029. The initial offering size was $350 million but has been upsized due to favorable market conditions. These notes will be settled on August 19, 2024, and will be issued privately to qualified institutional buyers.
The offering includes an option for initial buyers to acquire an additional $60 million in notes. These unsecured notes will accrue interest semi-annually and are set to mature on September 1, 2029, unless previously converted, redeemed, or repurchased. Core Scientific will settle conversions by cash, shares of its common stock, or a combination of both, at its discretion. The initial conversion rate is 90.9256 shares of common stock per $1,000 principal amount of notes, representing an initial conversion price of approximately $11.00 per share of common stock.
Core Scientific anticipates gaining approximately $386.6 million from the offering, with the potential to reach $445.0 million if additional notes are purchased. After repaying outstanding loans and senior secured notes, the remaining funds will be allocated towards general corporate needs such as working capital, expenses, and acquisitions.
Core Scientific filed for bankruptcy protection in December 2022 following a downturn in the crypto market and the collapse of partner Celsius. However, after its Chapter 11 restructuring plan was approved in January, the company was able to eliminate $400 million in debt and resume operations. Since returning to the stock market, Core Scientific’s stock price has risen by 145% to $8.46 per share on the Nasdaq, showcasing its resurgence.
One key factor in Core Scientific’s recovery has been its strategic pivot to artificial intelligence (AI). The company recently announced a significant agreement valued at $6.7 billion with CoreWeave, a startup supported by Nvidia and a leading AI technology supplier. This partnership will see Core Scientific provide an additional 112 megawatts of computing power to enhance CoreWeave’s operations. CEO Adam Sullivan highlighted the company’s growth trajectory since emerging from bankruptcy and emphasized their focus on developing top-tier digital infrastructure.
Core Scientific’s decision to increase its offering of convertible senior notes demonstrates investor confidence and the company’s commitment to strengthening its financial position. The strategic allocation of proceeds towards debt repayment, operational needs, and strategic partnerships reflects a well-thought-out plan for future growth and success in the rapidly evolving cryptocurrency and AI industries.
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