Business Context and Reporting Period
Core Scientific, Inc. filed a Form 8-K dated April 7, 2022, under Items 1.01 and 2.03 to report entry into two bridge promissory notes and the creation of related financial obligations. The filing identifies Core Scientific as an emerging growth company. The text states that the notes were entered into on April 7, 2020, although this appears inconsistent with the filing date and should be verified.
Key Financial Terms and Liquidity
| Item | Terms |
|---|---|
| Aggregate principal | $75 million, consisting of a $60 million note with B. Riley Commercial Capital, LLC and a $15 million note with an affiliate |
| Interest rate | 7% per annum |
| Maturity | December 7, 2022 |
| Amortization | Equal monthly installments beginning August 1, 2022 |
| Use of proceeds | Working capital and general corporate purposes |
| Security and guarantees | Unsecured and not guaranteed by any subsidiary |
The filing does not provide revenue, profit, cash flow, margin, or other operating performance metrics for the period.
Material Terms, Changes, and Restrictions
- Net proceeds from equity issuances, excluding specified tax-payment-related issuances, must be used to repay the notes.
- Net proceeds from secured debt above $500 million, excluding purchase-money debt, must also be applied to repayment.
- The notes require quarterly financial reporting and contain negative covenants covering mergers, certain dividends or distributions, asset dispositions, prepayments of contractually subordinated debt, affiliate transactions, and material contract changes.
- The company must enter into a $150 million committed equity facility with an affiliate of B. Riley Commercial Capital, LLC within 60 days after closing.
- Payment defaults, covenant defaults, and other customary events of default may permit acceleration of the obligations.
No comparable-period financial results or other material operating changes are reported in this filing.
Outlook, Risks, and Unusual Items
The financing provides short-term liquidity but creates scheduled principal repayments beginning in August 2022 and full maturity in December 2022. Mandatory repayment provisions may limit the company’s ability to retain proceeds from future equity or certain debt financings. Covenant restrictions and potential acceleration upon default represent additional liquidity and refinancing risks.
The filing does not provide management guidance or an operating outlook. The filing text says the definitive note agreements will be filed as exhibits to the company’s Form 10-Q for the quarter ended March 31, 2022.
Investor Verification Checklist
- Verify whether the notes were entered into on April 7, 2020 or April 7, 2022, given the apparent date inconsistency.
- Review the definitive note agreements and all repayment, covenant, default, and acceleration provisions.
- Confirm whether the required $150 million committed equity facility was entered into within the required 60-day period.
- Assess the company’s ability to fund monthly amortization and the December 2022 maturity.
- Review subsequent filings for additional secured debt, equity issuances, mandatory repayments, defaults, or refinancing activity.