B. Riley Financial ( NASDAQ: RILY ) on Wednesday issued an open letter to Core Scientific ( CORZ ), proposing debt restructuring to avoid a potential bankruptcy. Core Scientific ( CORZ ), one of the world's largest bitcoin miners, in October said it may seek bankruptcy protection as it expects to run out of cash by the end of 2022 or sooner. B. Riley ( RILY ), which is one of the largest creditors of Core Scientific ( CORZ ), proposed a $72M non-cash pay financing on favorable terms, providing more than two years of runway for the miner to achieve profitability. The creditor said it is prepared to fund the first $40M of financing immediately, with zero contingencies. For the remainder, all principal payments to equipment lenders would need to be suspended till bitcoin recovers to $18.5K. "Once that happens, the proposal provides free cash flow will be distributed to equipment lenders in interest and partial principal payments until they are made whole," B. Riley ( RILY ) co-CEO Bryant Riley wrote in the letter. Core Scientific ( CORZ ) currently has ~$300M of equipment and other loans with very short maturity. B. Riley's ( RILY ) outstanding loan is $42M. "These debts were part of an ill-conceived strategy to build out power facilities and expand miners while never selling bitcoin on hand and never hedging prices," said Riley. This led to Core Scientific ( CORZ ) having to sell its inventory - ~9.6K BTC in April valued at $362M - at a massive loss, Riley added. The firm noted that Core Scientific ( CORZ ) does not need to address its convertible debt for now as there are more than two years remaining to maturity.
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