Stronghold Digital Mining to exchange 10% convertibles for preferred stock

By Mary-Katherine Stinson

Lexington, Ky., Jan. 3 – Stronghold Digital Mining, Inc. announced an exchange agreement with holders of the company’s amended and restated 10% convertible notes in a press release on Tuesday.

The company will extinguish all the approximately $17.9 million outstanding debt and interest that would have accrued to maturity on the 10% notes in exchange for shares of a new series of convertible preferred stock with a face value of approximately $23.1 million.

The new series C preferred stock will be convertible into shares of the company’s class A common stock, or pre-funded warrants that may be exercised for class A shares at a conversion price of $0.40 per share.

Assuming the conversion of all series C stock anticipated to be issued, approximately 57.8 million shares of class A common stock would be issued, representing approximately 46% of the fully diluted shares outstanding.

The series C preferred stock will not bear a preferred dividend and will not require cash payments related to amortization, coupon payments or other payments.

The transaction is expected to close no later than Feb. 20 or as soon as practicable following the satisfaction of certain conditions including shareholder and Nasdaq approval.

“We acknowledge the significant number of shares of common stock that could be issued as a result of the exchange agreement, but we believe this is necessary to preserve cash, reduce our financial obligations, and better position the company to survive a potentially prolonged crypto market downturn. Following the closing of the exchange agreement, which is currently expected to occur in February 2023, the company expects to have less than $55 million in total principal amount of debt outstanding. We believe that the transaction will also create comprehensive equity alignment among existing Stronghold shareholders and the noteholders, which is critical in this time of stress on the industry,” Stronghold co-chairman and chief executive officer Greg Beard said in the press release.

As of Dec. 31, Stronghold had approximately $12.4 million of unrestricted cash on hand and approximately 6 bitcoin.

Stronghold is a New York-based vertically integrated bitcoin mining company with an emphasis on environmentally beneficial operations.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.