Bitcoin Miner Core Scientific Announces Mandatory Conversion of Outstanding Secured Convertible Notes Due in 2029

According to a July 8 announcement, the conversion will result in the exchange of approximately 45 million shares of Core Scientific's common stock for $260 million of convertible debt.

Bitcoin (BTC) miner Core Scientific has announced the mandatory conversion of its outstanding secured convertible notes due in 2029.

The conversion will see nearly 45 million shares of Core Scientific common stock exchanged for $260 million of convertible debt, an announcement on July 8 revealed.

The mandatory conversion was triggered on July 5, when the trading price of Core’s stock, based on the daily volume weighted average price (VWAP), stayed above $2.1 billion for 20 consecutive trading days.

The notes will convert into common stock on July 10. Holders will receive shares based on a conversion price and cash for any partial shares they are entitled to.

Core’s secured convertible notes offered two interest options: 10% per year paid entirely in cash, or 6% per year in cash plus 6% per year in stock, calculated based on the 20-day average trading price.

At the time of writing, Core shares (CORZ) are trading at $10.14 on the Nasdaq, down 1.5%. However, over the past six months, the stock has seen gains of 194.2%.

Core Scientific bankruptcy and convertible notes

The convertible notes were issued as part of Core’s bankruptcy proceedings. In January, Core Scientific emerged from bankruptcy after its plan of reorganization was confirmed by the bankruptcy court for the Southern District of Texas.

Under the plan, noteholders received $1.201 per $1 face value for notes due in August and $1.628 per $1 face value for convertible notes due in April.

“The conversion [...] highlights the significant progress we have made since our emergence from bankruptcy earlier this year,” Core CEO Adam Sullivan said in a statement.

Unsecured creditors

In related news, Core Scientific also announced the extinguishment of a contingent payment obligation for unsecured creditors.

As per the terms set in Core’s Chapter 11 plan, the company had initially estimated a $3 million liability to unsecured creditors. The mechanism was designed to provide additional compensation to general unsecured creditors if the company’s stock did not meet performance benchmarks.

However, Core’s shares performance over the past weeks has eliminated the obligation, which means the company is no longer required to make additional payments to general unsecured creditors.

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