| Item 1.01 | Entry Into a Material Definitive Agreement. |
On April 7, 2020, Core Scientific, Inc. (the “Company”) entered into two bridge promissory notes, one in an aggregate principal amount of $60 million with B. Riley Commercial Capital, LLC and one in an aggregate principal amount of $15 million with an affiliate of B. Riley Commercial Capital, LLC (the “Notes”). The Notes mature on December 7, 2022, bear interest at a rate of 7% per annum and amortize in equal monthly installments starting on August 1, 2022. The Company will use the net proceeds of the Notes for working capital and general corporate purposes.
The Notes require the proceeds of (i) any equity issuances (other than issuances consummated for purposes of making tax payments in connection with the vesting of restricted stock and restricted stock units) and (ii) any secured debt (other than purchase money debt) in excess of $500 million, in each case, to be applied by the Company to repay the outstanding principal amount of the Notes.
The Notes are unsecured and not guaranteed by any subsidiary of the Company. The Company is subject to a quarterly financial reporting covenant and negative covenants restricting the Company’s ability to (i) merge or consolidate with any other person (subject to customary exceptions), (ii) make cash dividends or distributions with any material portion of the proceeds of the Notes or any other debt, (iii) dispose of all or substantially all of the assets of the Company, (iv) prepay contractually subordinated debt, (v) transact with affiliates (subject to customary exceptions) and (vi) modify or enter into any material contracts in a manner that would restrict the Company from making payments to the noteholders under the Notes or require the net cash proceeds from an equity raise to be paid to any entity other than the noteholders under the Notes. Upon the occurrence of certain events of default, the Company’s obligations under the Notes may be accelerated. Such events of default include payment defaults under the Notes, covenant defaults and other customary defaults.
The Notes also require that the Company enter into a $150 million committed equity facility with an affiliate of B. Riley Commercial Capital, LLC prior to the date that is 60 days following the closing of the Notes.
The foregoing description does not constitute a complete summary of the terms of the Notes and is qualified in its entirety by reference to the copies of the Notes, which will be filed as exhibits to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant |
The information included in Item 1.01 of this Current Report is incorporated by reference into this Item 2.03.
