FAIRFIELD, Conn., Dec. 20,
2022 /PRNewswire/ --
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.
Greenidge Generation Holdings Inc. (NASDAQ: GREE) ("Greenidge"
or the "Company"), 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").
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.
Liquidity Update
The Company's cash and cash equivalents and restricted cash as
of November 30, 2022 amounted to
approximately $22.0 million, compared
to $38.5 million as of September 30, 2022. This represents an average
monthly cash burn rate of approximately $8
million during October and November
2022, of which approximately $5.5
million per month was associated with principal and interest
payments to NYDIG. Further, the Company expects to use a similar
amount of cash during the month of December
2022, dependent on timing of payments. It is very difficult
to estimate liquidity requirements and future cash burn rates;
however, the Company's current cash burn rates are not
sustainable.
In the absence of additional liquidity, the Company is at risk
of having insufficient cash to support ongoing business operations
within the next two months. Assuming NYDIG and Greenidge enter into
definitive agreements reflecting the terms described in this
release, to remain viable through 2023, the Company currently
estimates it will require at least approximately $20 million of additional liquidity to fund its
cash requirements, although this estimate is subject to a number of
assumptions and may vary materially. The Company stated in its
Quarterly Report on Form 10-Q for the nine months ended
September 30, 2022 that there is
uncertainty regarding the Company's financial condition and
substantial doubt about its ability to continue as a going
concern. There is substantial likelihood that the Company's
independent auditors' opinion for the 2022 financial statements
will reflect a going concern qualification. While the proposed
transaction described herein addresses a portion of the Company's
indebtedness, the financial terms of this potential transaction on
the terms currently contemplated in the Term Sheet do not change
the risks previously identified in the Company's public filings and
herein. As a result, the Company continues to actively
explore raising additional equity capital, including selling
securities in the market pursuant to its at-the-market equity
program, and to engage in discussions with lenders. In
addition, the Company is considering various alternatives in
connection with Support.com, including the disposition of assets
and other transactions, to further reduce its expenses. There can
be no assurances that any additional equity financing will be
available to the Company on favorable terms, or potentially at
all. Greenidge's board of directors has engaged in active
discussions about the potential for 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. In the event the Company determines
that its potential sources of liquidity will not be available to it
or will not allow it to meet its obligations as they become due, it
will need to change course and pursue an in-court restructuring of
its liabilities. The Company expects to continue to incur net
losses, comprehensive losses, and negative cash flows from
operating activities in accordance with its operating plan.
Additional Risk Factors
Investing in the Company's common stock is highly speculative
and involves risks, including the complete loss of any investment.
You should carefully consider the additional risk factors below as
well as the risk factors described in Part I, Item 1A, "Risk
Factors" in the Company's Annual Report on Form 10-K for the year
ended December 31, 2021 and any
updates to those risk factors or new risk factors contained in the
Company's subsequent Quarterly Reports on Form 10-Q and any
registration statements that we file with the Securities and
Exchange Commission. The Company expects to update these Risk
Factors from time to time in the periodic and current reports that
it files with the Securities and Exchange Commission after the date
of this release.
Because there is substantial doubt about the Company's
ability to continue as a going concern and to manage its
liabilities in light of its current operating environment, an
investment in the Company's common stock is highly speculative;
holders of the Company's common stock are highly likely to suffer a
total loss of their investment if the Company is unable to
restructure its debt and files, or is forced to file, for
bankruptcy, and even if the agreement with NYDIG is finalized and
bankruptcy is avoided, the Company's prospects for operating a
viable hosting business are uncertain.
The Company anticipates that existing cash resources will be
depleted within the next two months. As a result, the Company is in
the process of exploring a number of potential strategic
alternatives with respect to the Company's corporate or capital
structure, including raising additional capital and renegotiating
its debt obligations (e.g., the Term Sheet). In addition to the
discussions that resulted in the Term Sheet, the Company has begun
to engage in discussions with certain of its other creditors
regarding these initiatives. The Company expects these activities
will continue and intensify. Among possible alternatives, the
Company may explore liability management transactions, including
exchanging its existing debt for equity or additional debt, which
transactions may be dilutive to holders of the Company's class A
common stock, par value $0.0001 (the
"Common Stock"). These discussions may not result in any agreement
on commercially acceptable terms or at all. Furthermore, the
Company may seek alternative sources of equity or debt financing,
delay capital expenditures or evaluate potential asset sales, and
potentially could seek relief under the applicable bankruptcy or
insolvency laws. In the event of a bankruptcy proceeding or
insolvency, or restructuring of the Company's capital structure,
holders of the Company's Common Stock could suffer a total loss of
their investment. It is uncertain that any individual source of
liquidity described above will be sufficient to address the
Company's liquidity requirements; and, even if all of the potential
sources of liquidity described above are available, they may not be
sufficient to address the Company's liquidity requirements, which
is also dependent on volatile bitcoin and natural gas
prices. Should the Company be unsuccessful in completing any
further financing, the Company would continue to be cash flow
negative and would need to curtail or cease operations. The Company
is endeavoring to complete such financing transactions to provide
the Company with working capital sufficient for its present
requirements.
Due to these factors and those previously disclosed in the
Company's public filings, substantial doubt exists about the
Company's ability to continue as a going concern. An investment in
the Company's Common Stock is highly speculative and could result
in a total loss of the investment. There is substantial likelihood
that the Company's independent auditors will take a going concern
qualification in the auditor report for the 2022 financial
statements. Future developments may negatively affect the Company's
prospects, which may in turn affect the price of the Common Stock
and result in a lack of liquidity or delisting of shares.
The agreements governing the Company's indebtedness contain
covenants that may limit its ability to take advantage of certain
business opportunities advantageous to the Company.
The agreements governing the Company's indebtedness contain
various covenants that limit its ability to, among other
things:
- pay dividends or make other distributions to its
stockholders;
- make restricted payments;
- incur liens;
- engage in transactions with affiliates;
- modify certain material contracts; and
- enter into business combinations.
These restrictions could limit the Company's ability to obtain
future financing, make acquisitions, fund needed capital
expenditures, withstand economic downturns in its business or the
economy in general, conduct operations or otherwise take advantage
of business opportunities that may arise. At the same time, the
covenants in the instruments governing the Company's indebtedness
may not provide investors with protections against transactions
they may deem undesirable. To the extent the Company engages in
restructuring activities, such covenants may further limit the
items described above.
If the Company's cash flows continue to prove inadequate to
service its debt and provide for other obligations, the Company may
be further required to refinance all or a portion of its existing
debt or future debt at unfavorable terms.
The Company's ability to make payments on and refinance its debt
and other financial obligations and to fund its capital
expenditures and acquisitions will depend on the Company's ability
to generate substantial operating cash flow. This will depend on
future performance, which will be subject to prevailing economic
conditions, including the price of bitcoin and/or the
cost of natural gas, and to financial, business and other factors
beyond the Company's control.
In addition, the Company's debt obligations require it to repay
or refinance its obligations when they come due. If the Company's
cash flows were to prove inadequate to meet its debt service,
rental and other obligations in the future, it may be required to
refinance all or a portion of its existing or future debt, on or
before maturity, to sell assets or to obtain additional financing.
The Company cannot give assurance that it will be able to refinance
any of its indebtedness, sell any such assets, or obtain additional
financing on commercially reasonable terms or at all. As of
November 30, 2022, the Company had
approximately $162 million aggregate
principal amount of indebtedness outstanding. Even if the Company
pays its debt outstanding to NYDIG, this may not be sufficient to
address the Company's liquidity requirements, and the Company may
nonetheless be required to pursue an in-court restructuring of its
liabilities to address the claims of other lenders.
About Greenidge Generation Holdings Inc.
Greenidge Generation Holdings Inc. (NASDAQ: GREE) is a
vertically integrated cryptocurrency datacenter and
power generation company.
Forward-Looking Statements
This press release includes certain statements that may
constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All
statements other than statements of historical fact are
forward-looking statements for purposes of federal and state
securities laws. These forward-looking statements involve
uncertainties that could significantly affect Greenidge's financial
or operating results. These forward-looking statements may be
identified by terms such as "anticipate," "believe," "continue,"
"foresee," "expect," "intend," "plan," "may," "will," "would,"
"could," and "should," and the negative of these terms or other
similar expressions. Forward-looking statements are based on
current beliefs and assumptions that are subject to risks and
uncertainties and are not guarantees of future performance.
Forward-looking statements in this press release include, among
other things, statements regarding the business plan, business
strategy and operations of Greenidge in the future. In addition,
all statements that address operating performance and future
performance, events or developments that are expected or
anticipated to occur in the future, such as statements concerning
(i) completion of definitive debt and hosting arrangements with
NYDIG, (ii) potential reductions in debt balances under the Master
Equipment Finance Agreements dated as of May
25, 2021 and March 21, 2022,
(iii) expected terms of final hosting arrangement, and (iv) ability
to secure rights to a mining site to satisfactorily meet the
requirements of the Post-Closing Covenant, are forward looking
statements. Forward-looking statements are subject to a number of
risks, uncertainties and assumptions. Matters and factors that
could cause actual results to differ materially from those
expressed or implied in such forward-looking statements include but
are not limited to the matters and factors described in Part I,
Item 1A. "Risk Factors" of Greenidge's Annual Report on Form 10-K
for the year ended December 31, 2021,
in Part II, Item 1A. "Risk Factors" of Greenidge's Quarterly Report
on Form 10-Q for the period ended September
30, 2022, and its other filings with the Securities and
Exchange Commission, as well as statements about or relating to or
otherwise affected by the completion of management's final review
of the financial results and Greenidge's other closing procedures.
Consequently, all of the forward-looking statements made in this
press release are qualified by the information contained under this
caption. No assurance can be given that these are all of the
factors that could cause actual results to vary materially from the
forward-looking statements in this press release. You should not
put undue reliance on forward-looking statements. No assurances can
be given that any of the events anticipated by the forward-looking
statements will transpire or occur, or if any of them do occur, the
actual results, performance, or achievements of Greenidge could
differ materially from the results expressed in, or implied by, any
forward-looking statements. All forward-looking statements speak
only as of the date of this press release and Greenidge does not
assume any duty to update or revise any forward-looking statements
included in this press release, whether as a result of new
information, the occurrence of future events, uncertainties or
otherwise, after the date of this press release.
For further information, please contact:
Investor Relations
investorrelations@greenidge.com
Media Inquiries
media@greenidge.com
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SOURCE Greenidge Generation Holdings Inc.