Core Scientific's Mandatory Conversion of Secured Convertible Notes
Core Scientific, a Bitcoin miner, has announced the mandatory conversion of its outstanding secured convertible notes due in 2029. The conversion will involve exchanging around 45 million shares of Core Scientific's common stock for $260 million of convertible debt.
The trigger for this mandatory conversion occurred on July 5 when the trading price of Core's stock, based on the daily volume weighted average price (VWAP), maintained levels above $2.1 billion for 20 consecutive trading days. Consequently, the notes are set to convert into common stock on July 10, with holders receiving shares based on a conversion price and cash for any partial shares they are entitled to.
Core's secured convertible notes provided two interest options: 10% per year paid entirely in cash or 6% per year in cash combined with 6% per year in stock, calculated based on the 20-day average trading price.
At the time of writing, Core's shares (CORZ) are trading at $10.14 on the Nasdaq, experiencing a slight decline of 1.5%. Despite this recent dip, the stock has seen a substantial increase of 194.2% over the last six months.
Core Scientific’s Bankruptcy
The issuance of convertible notes was part of the bankruptcy proceedings of Core Scientific. The company emerged from bankruptcy in January following the confirmation of its reorganization plan by the bankruptcy court for the Southern District of Texas.
Under the plan, holders of the notes received $1.201 per $1 face value for those maturing in August and $1.628 per $1 face value for convertible notes maturing in April.
Core's CEO, Adam Sullivan, emphasized the progress made since the company's emergence from bankruptcy earlier this year.
Unsecured Creditors
Core Scientific additionally announced the elimination of a contingent payment obligation for unsecured creditors as per the terms outlined in Core's Chapter 11 plan. Initially estimating a $3 million liability to unsecured creditors, the company has fulfilled its obligations without the need for additional payments to these creditors.
