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Pennsylvania-based Stronghold Digital’s (SDIG) latest debt restructuring deal will allow the postponement of principal repayments on $54.9 million of debt through June of 2024.
Under a cash squeeze as the bitcoin bear market combines with spiking energy prices, Stronghold since last summer has struck deals with its lenders to reduce immediate debt obligations as it seeks to avoid the Chapter 11 fates of peers like Compute North and Core Scientific (CORZ).
This latest agreement with Whitehawk Finance on $55 million of debt releases the miner of all amortization payments until July 2024, which otherwise would have required the payment of $1.6 million per month (totaling $29 million through June 2024), according to a Tuesday filing with the U.S. Securities and Exchange Commission.
In addition, the company won’t have to make any payments at all until June 2023. Beginning then, Stronghold will make payments based on a monthly cash sweep calculated as 50% of the company’s average daily cash balance for each month in excess of $7.5 million, the filing said.
The new credit agreement also reduces Stronghold’s minimum liquidity covenants until the end of 2024 and allows the miner to pay for its interest in kind for up to six months, as long as its average daily cash balance for the respective month is less than $5 million.
Stronghold also signed a two-year deal with miner hosting company Foundry for 4,500 miners, totaling approximately 420 petahash/second in computing power with an average efficiency of 35 joules/terahash. The hosting fee will be the realized net cost of power at Stronghold’s Panther Creek Plant plus 10%. Foundry and CoinDesk share the same parent company, Digital Currency Group.
Shares are higher by 5.4% in premarket trading to $0.59.
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