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As part of its efforts to reduce its debt load, Stronghold Digital Mining (NASDAQ:SDIG) struck a deal with noteholders Tuesday to exchange ~$17.9M of 10% convertible notes for convertible preferred stock with a face value of ~$23.1M.
The Series C preferred shares, which will not bear a preferred dividend, will be convertible into shares of the company’s Class A common stock at $0.40 a share, it said. Assuming all preferred stock gets converted, ~57.8M shares of common stock would then be issued, representing about 46% of the fully diluted shares outstanding on a pro forma basis.
“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,” said Stronghold CEO and Co-Chairman Greg Beard.
Shares of the bitcoin (BTC-USD) miner gained 8.5% to $0.52 in premarket trading, down significantly from when it first started trading at $28.90 on October 20, 2021. But in the face of a prolonged market downturn, a slew of bitcoin miners have suffered from liquidity issues that have caused them to turn to cost-cutting initiatives.
As of December 31, the miner had approximately $12.4M of unrestricted cash on hand and about six bitcoin (BTC-USD).
In September, Stronghold (SDIG) said it identified an additional annualized cost savings and announced a $9M private placement.
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