Lender Negotiations Update
- Entered into a non-binding term sheet with NYDIG regarding approximately $74 million of debt contemplating the following terms:
- NYDIG would purchase miners with approximately 2.8 EH/s of mining capacity
- Greenidge would enter into a hosting agreement with NYDIG for approximately 2.8 EH/s of mining capacity, which would result in a material change to Greenidge’s current business strategy and result in Greenidge largely operating miners owned by NYDIG, rather than operating miners owned by Greenidge
- Greenidge may transfer certain credits, coupons and additional assets to NYDIG, including mining infrastructure awaiting deployment at potential mining sites, contingent upon Greenidge facilitating for NYDIG rights to a mining site within three months following the completion of debt restructuring and hosting agreements
- In exchange for the purchased miners and transfer of mining infrastructure and credits to NYDIG, NYDIG would agree to a reduction of approximately $57 to $68 million of debt
- Greenidge will be pledging substantially all of its unencumbered assets to NYDIG to secure the remaining balance of the loan
- Greenidge would retain ownership of miners with a capacity of 1.2 EH/s
- Any change in the terms reflected in this non-binding term sheet could have a material adverse effect on Greenidge and its stockholders and could further impact its liquidity and its ability to continue as a going concern. For additional information related to the NYDIG negotiations and Greenidge’s liquidity update, certain additional risk factors are included herein that should be read in addition to those already provided in Greenidge’s public filings
Liquidity Update
- There remains uncertainty regarding Greenidge’s financial condition and substantial doubt about its ability to continue as a going concern
- The Company’s average monthly cash burn rate during October and November 2022 was approximately $8 million, of which approximately $5.5 million per month was associated with principal and interest payments to NYDIG. Further, the Company expects to have a similar cash burn, and similar payments to NYDIG, during December 2022
- There is a substantial likelihood that Greenidge’s independent auditors’ opinion will reflect a going concern qualification in their audit report for the 2022 financial statements
- Greenidge’s board of directors has engaged in active discussions about the potential for, and timing of, a voluntary bankruptcy filing in the event that: (1) Greenidge determines that potential sources of liquidity will not be available to it; (2) Greenidge’s remaining available capital does not allow it to meet its obligations as they become due; or (3) Greenidge defaults on any of its material contracts or indebtedness
- The Company continues to actively explore raising additional equity capital and to engage in discussions with its lenders
- The Company is considering various alternatives in connection with its wholly owned subsidiary, Support.com, including the disposition of assets and other transactions
NYDIG and Greenidge will endeavor to enter into definitive documentation reflecting the terms described in this release, but there can be no assurances made that such terms will not change materially nor can there be any assurances made that the transactions discussed in this release will be consummated. There can be no assurances made that Greenidge will be successful in facilitating for the securing of rights to a mining site within three months of completion of the debt restructuring agreements. There are certain third-party consents and other conditions to closing that are required in order for Greenidge to enter into definitive documentation and there can be no assurance that such third party consents can be obtained or conditions satisfied.
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Greenidge Generation Holdings Inc., a vertically integrated cryptocurrency datacenter and power generation company, today provided an update on important proposed steps towards restructuring a significant portion of its debt with NYDIG ABL LLC (“NYDIG”).
“We are pleased with the progress of our constructive negotiations with NYDIG to address our secured debt,” said Dave Anderson, Chief Executive Officer of Greenidge. “NYDIG values our operational excellence, which affords us the ability to work towards a structure that would allow our two organizations to partner, with Greenidge providing hosting services. If we complete this debt restructuring, this would improve our future liquidity and would provide a significant step toward the improvement of our balance sheet. In addition, we believe that the contemplated terms of a concurrently executed hosting arrangement would allow us to continue participating in the future upside potential of bitcoin.”
“We are pleased to continue working with Greenidge,” said Trevor Smyth, Head of Structured Financing at NYDIG. “As the company optimizes to account for current market conditions, we look forward to working together on potential future strategic opportunities and remain strident believers in the ongoing promise of bitcoin.”
On December 19, 2022, Greenidge entered into a non-binding term sheet (“Term Sheet”) with NYDIG to potentially restructure its approximately $74 million of debt remaining with NYDIG under the Master Equipment Finance Agreements dated as of May 25, 2021 and March 21, 2022. Under the Term Sheet, it is contemplated that Greenidge would reduce its debt by approximately $57 to $68 million in exchange for a substantial number of its miners, transfer credits and coupons that have accrued to Greenidge under its non-fixed price purchase contracts with Bitmain Technologies, Ltd. and transfer Greenidge’s acquired mining infrastructure awaiting deployment at potential mining sites within three months following the completion of debt restructuring and hosting agreements (the “Post-Closing Covenant”).
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Pursuant to the Term Sheet, Greenidge would provide additional collateral on its remaining mining-related assets, infrastructure assets, equity of its subsidiaries and certain cash balances to secure the remaining debt balance with NYDIG, which may have a balance of between $6 million to $17 million based on satisfactory transfer of assets to NYDIG and completion of the Post-Closing Covenant. The loan agreement will contain certain affirmative, negative and financial covenants, early amortization events, and events of default. In the event of a default, NYDIG will have the right to foreclose or take other legal action against Greenidge and such collateral.
Under the Term Sheet, Greenidge and NYDIG would concurrently enter into a long-term hosting agreement, whereby Greenidge would provide hosting services for up to 74 Megawatts (“MW”) of energy capacity, as well as an additional approximate 39 MW upon satisfactory completion of the Post-Closing Covenant. The terms of such arrangement would require NYDIG to pay a hosting fee that would cover the cost of power and direct costs associated with management of the mining facilities, as well as a profit-sharing arrangement of gross profits. Excluding revenues from its wholly owned subsidiary Support.com (“Support.com”) that has been reported as the Support services segment, approximately 90% and 83% of Greenidge’s revenues for fiscal 2021 and nine months ended September 30, 2022, respectively, were generated through its mining of bitcoin. If the contemplated transactions are consummated, Greenidge estimates that 60% to 75% of its likely revenues in the next two years will be generated from the hosting agreements to be entered into with NYDIG, assuming similar revenues from power and capacity as fiscal 2021 and annualized 2022 based off nine months results. As a result of Greenidge entering into the hosting agreements, a near-term increase in bitcoin prices, even a significant one, may not have a corresponding beneficial impact on Greenidge’s business, liquidity or prospects.
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