Core Scientific (CORZ) Reports Major Financial & Equity Restructuring

Ticker: CORZR · Form: 8-K · Filed: Jan 23, 2024 · CIK: 1839341

Core Scientific, Inc./Tx 8-K Filing Summary
FieldDetail
CompanyCore Scientific, Inc./Tx (CORZR)
Form Type8-K
Filed DateJan 23, 2024
Risk Levelhigh
Pages16
Reading Time19 min
Key Dollar Amounts$0.00001, $6.81, $0.01, $80 million, $40 million
Sentimentmixed

Complexity: moderate

Sentiment: mixed

Topics: equity-sales, debt, corporate-action, restructuring

TL;DR

**CORZ is shaking up its finances and equity, watch for potential dilution.**

AI Summary

Core Scientific, Inc. (CORZ) filed an 8-K on January 23, 2024, indicating significant corporate actions including the entry into and termination of material definitive agreements, creation of direct financial obligations, and unregistered sales of equity securities. This filing signals that the company is actively restructuring its financial and equity landscape, potentially impacting existing shareholders through changes in ownership structure and financial commitments. Investors should note these changes as they could affect the value and dilution of their holdings.

Why It Matters

This filing indicates Core Scientific is undergoing substantial financial and equity changes, which could dilute existing shares or alter the company's debt profile, directly impacting shareholder value.

Risk Assessment

Risk Level: high — The filing indicates multiple significant changes including new financial obligations and unregistered equity sales, which inherently carry high risk for existing shareholders due to potential dilution and altered financial leverage.

Analyst Insight

A smart investor would closely monitor subsequent filings for details on the 'Material Definitive Agreement' and 'Unregistered Sales of Equity Securities' to assess potential dilution and the impact on the company's financial health before making any investment decisions.

Key Numbers

  • 001-40046 — Commission File Number (Identifies Core Scientific's registration with the SEC.)
  • 2024-01-23 — Date of Report (Indicates when the earliest event reported in the 8-K occurred.)

Key Players & Entities

  • Core Scientific, Inc. (company) — the registrant filing the 8-K
  • January 23, 2024 (date) — date of earliest event reported in the 8-K
  • 001-40046 (string) — Commission File Number for Core Scientific, Inc.
  • Delaware (string) — State of incorporation for Core Scientific, Inc.

Forward-Looking Statements

  • Core Scientific's stock price will experience increased volatility due to the uncertainty surrounding the financial and equity restructuring. (Core Scientific, Inc.) — medium confidence, target: 2024-03-23
  • Further details regarding the nature of the material agreements and financial obligations will be disclosed in subsequent filings or earnings calls. (Core Scientific, Inc.) — high confidence, target: 2024-04-30

FAQ

What specific types of material agreements did Core Scientific, Inc. report in this 8-K filing?

The filing indicates both the 'Entry into a Material Definitive Agreement' and 'Termination of a Material Definitive Agreement' as reported events on January 23, 2024.

Did Core Scientific, Inc. incur any new financial obligations according to this filing?

Yes, the filing explicitly states 'Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant' as an item of information.

Were there any sales of equity securities reported in this 8-K?

Yes, the filing includes 'Unregistered Sales of Equity Securities' as one of the reported items, indicating new equity has been issued outside of a registered offering.

What is the state of incorporation for Core Scientific, Inc. as per this 8-K?

Core Scientific, Inc. is incorporated in Delaware, as stated in the filing under 'State or other jurisdiction of incorporation'.

What is the earliest event date reported in this 8-K filing?

The earliest event reported in this 8-K filing occurred on January 23, 2024, as indicated by 'Date of Report (Date of earliest event reported): January 23, 2024'.

Filing Stats: 4,773 words · 19 min read · ~16 pages · Grade level 16.1 · Accepted 2024-01-23 17:12:45

Key Financial Figures

  • $0.00001 — ich registered Common stock, par value $0.00001 per share CORZ * Warrants, each w
  • $6.81 — of common stock at an exercise price of $6.81 per share CORZW * Warrants, each
  • $0.01 — of common stock at an exercise price of $0.01 per share CORZZ * Indicate by chec
  • $80 million — and collateral agent, consisting of an $80 million first-lien credit facility with certain
  • $40 million — y, the " Exit Lenders ") equal to (i) a $40 million term loan comprised of (x) a $20 millio
  • $20 million — 40 million term loan comprised of (x) a $20 million initial term loan and (y) a $20 million
  • $1.25 million — izes in equal quarterly installments of $1.25 million beginning on January 1, 2026. Upon the
  • $18,204,559 — e Date, in an aggregate amount of up to $18,204,559 (collectively, the " Equipment Priority
  • $260.0 million — e terms of the Plan, the Company issued $260.0 million aggregate principal amount of secured c
  • $1,000 — e of 171 shares of New Common Stock per $1,000 principal amount of notes (equal to a
  • $5.83 — f notes (equal to a conversion price of $5.83 per share of New Common Stock), which t
  • $150.0 million — e terms of the Plan, the Company issued $150.0 million aggregate principal amount of senior se
  • $8.72 — e of New Common Stock equals or exceeds $8.72 per share for 20 consecutive trading da
  • $43,333,333.33 — ment Obligation ") of the lesser of (a) $43,333,333.33 and (b) the difference between (1) $260
  • $260,000,000 — 3.33 and (b) the difference between (1) $260,000,000 and (2) the fair market value of the Co

Filing Documents

01

Item 1.01 Entry into a Material Definitive Agreement. Exit Credit Agreement On the Effective Date, under the terms of the Plan, the Company entered into a credit and guaranty agreement, dated as of January 23, 2024 (the " Exit Credit Agreement "), by and among the Company, as borrower, the guarantors named therein, the lenders party thereto and Wilmington Trust, National Association, as administrative agent and collateral agent, consisting of an $80 million first-lien credit facility with certain holders of the Company's April Convertible Notes and August Convertible Notes (in such capacity, the " Exit Lenders ") equal to (i) a $40 million term loan comprised of (x) a $20 million initial term loan and (y) a $20 million delayed-draw term loan and (ii) a $40 million roll-up of the outstanding balance of the April Convertible Notes and August Convertible Notes (the " Exit Facility "). The Exit Facility will mature on January 23, 2027. From the Effective Date, cash borrowings under the Exit Facility bear interest at 9.0% per annum, payable on the first business day of each Fiscal Quarter (as defined in the Exit Credit Agreement), commencing on April 1, 2024. The Exit Facility amortizes in equal quarterly installments of $1.25 million beginning on January 1, 2026. Upon the occurrence and during the continuance of an Event of Default (as such term is defined in the Exit Credit Agreement), the obligations under the Exit Facility shall automatically bear interest at a rate equal to an additional 2.0% per annum over the rate otherwise applicable, with such interest being payable in cash on each interest payment date (unless the administrative agent demands prior payment). Obligations under the Exit Credit Agreement are secured by a valid and perfected lien and security interest on substantially all assets and property of the Company and the guarantors thereof, including a first-priority lien on all new, unencumbered miner equipment purchased by the Company or any subsi

02

Item 1.02 Termination of a Material Definitive Agreement. Equity Interests On the Effective Date, all equity interests in the Company that existed immediately prior to the Effective Date were cancelled, including the Company's then-existing common stock and warrants, and the Company issued or caused to be issued the New Common Stock in accordance with the terms of the Plan. Debt Securities and Agreements On the Effective Date, the obligations of the Company under the Company's April Convertible Notes, August Convertible Notes, replacement debtor-in-possession credit agreement, stock certificates, book entries, and any other certificate, share, note, bond, indenture, purchase right, option, warrant, or other instrument or document, directly or indirectly, evidencing or creating any indebtedness or obligation of or ownership interest in the Debtors giving rise to any claim or interest (except such certificates, notes or other instruments or documents evidencing indebtedness or obligations of, or interests in, the Debtors that are specifically reinstated pursuant to the Plan) were cancelled, and the duties and obligations of all parties thereto were deemed satisfied in full, canceled, released, discharged, and of no force or effect.

03

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. The information set forth in Item 1.01 above relating to the Exit Credit Agreement, the New Miner Equipment Lender Agreements (Election 2), the Secured Convertible Notes Indenture and the Secured Notes Indenture is incorporated herein by reference.

02

Item 3.02 Unregistered Sales of Equity Securities On the Effective Date, pursuant to the Plan, the Company issued, or will issue: 184,998,580 shares of New Common Stock; 175,816,062 Warrants; Secured Convertible Notes in an aggregate principal amount of $260.0 million; 51,783,625 CVRs; and GUC CVRs The information set forth in Item 1.01 under the headings "Warrant Agreement," "Secured Convertible Notes Indenture" and "Contingent Value Rights Agreement" and the information set forth in Item 8.01 under the heading "GUC Contingent Value Rights" is incorporated herein by reference. As of the Effective Date, pursuant to the Plan, the Company will issue 184,998,580 shares of New Common Stock and 175,816,062 Warrants. The shares of New Common Stock and Warrants were or will be issued in transactions not involving an underwriter pursuant to and in accordance with section 1145 of the Bankruptcy Code. Further, shares of New Common Stock issuable upon the conversion or exercise, as applicable, of the New Secured Convertible Notes, the Warrants, the CVRs or the GUC CVRs would be issued in reliance upon the exemption provided by section 1145 of the Bankruptcy Code. For further information, see the Explanatory Note and Item 1.01 of this Current Report, which are incorporated herein by reference.

03

Item 3.03 Material Modifications to Rights of Security Holders. Except as otherwise provided in the Plan and related documentation, all notes, equity, agreements, instruments, certificates and other documents evidencing any claim against or interest in the Debtors (except such certificates, notes or other instruments or documents evidencing indebtedness or obligations of, or interests in

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