By Kathryn Hardison

B. Riley Financial Inc. issued an open letter on Wednesday to Core Scientific Inc., offering to provide $72 million in new, non-cash pay financing as Core Scientific considers strategic alternatives for its capital structure.

B. Riley, a financial services platform and one of the largest creditors of Core Scientific, said it has engaged with the blockchain data center company to provide liquidity to avoid a potential bankruptcy proceeding. The proposed financing would provide more than two years of runway for Core Scientific, B. Riley said.

B. Riley has offered to fund the first $40 million of financing immediately, with zero contingencies. For the remainder of B. Riley's proposed new financing, all principal payments to equipment lenders would need to be suspended until the price of Bitcoin recovers to $18,500, the company said. Once that happens, free cash flow will be distributed to equipment lenders in the form of interest and partial principal payments until they are made whole. Additional free cash flow will be distributed in increasing amounts as the price of Bitcoin rises, the company said.

Also, all interest payments to equipment lenders would be paid in kind for one year to provide additional runway for the company, B. Riley said.

Core Scientific currently has about $300 million of equipment and other loans that have a short maturity, B. Riley said, and those loans were made when the price of Bitcoin was much higher.

B. Riley said it believes there is a path forward, and it has been proactive in working on a solution, such as providing debt on some assets. It strongly urged Core Scientific's board of directors to work with creditors to find a solution that benefits all stakeholders.

Write to Kathryn Hardison at kathryn.hardison@wsj.com

(END) Dow Jones Newswires

December 14, 2022 14:58 ET (19:58 GMT)

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