(CORZQ) Announces $55M Equity Rights Offering

Core Scientific, Inc. (OTC: CORZQ) ("Core Scientific" or the “Company”), a leader in high-performance blockchain computing data centers and software solutions, today announced the commencement of a rights offering (the “Rights Offering”) to all holders of record of shares of the Company’s common stock (and certain other equity interests, including vested restricted stock units) (“Existing Common Interests”) as of 5:00 p.m., New York City time, on November 16, 2023 (the “Record Date”) pursuant to the Third Amended Joint Chapter 11 Plan of Reorganization of Core Scientific, Inc. and its Debtor Affiliates (the “Plan”) and the related Disclosure Statement.

The Plan is the result of mediation and extensive negotiations that resulted in a Restructuring Support Agreement (the “RSA”) with certain of the Company’s key stakeholders, including an ad hoc group of the Company’s convertible note holders and the Official Committee of Equity Security Holders, that provides for a global settlement of issues between the Company and the other parties to the RSA. The Company has also reached settlements with several other key creditors, and with conditional approval of the Disclosure Statement, is moving forward with solicitation of the Plan and a potential exit from bankruptcy in early 2024.

The Plan, which incorporates the RSA settlements and is premised on a $1.5 billion total enterprise value of reorganized Core Scientific, provides for a comprehensive restructuring of the Company’s balance sheet and will strengthen the Company by substantially reducing its debt and preserving more than 270 jobs, as well as provide a meaningful recovery to the Company’s existing shareholders. A key component of the Plan [and reorganized Core Scientific’s post-emergence liquidity] is the Rights Offering.

On November 14, 2023, the U.S. Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) approved, among other matters, rights offering procedures and related materials that will govern the terms of the Rights Offering (the “Rights Offering Procedures”).

SUMMARY OF THE TERMS OF THE $55 MILLION RIGHTS OFFERING:

• Each holder of Existing Common Interests will receive one subscription right for each Existing Common Interest held as of 5:00 p.m., New York City time on November 16, 2023, which is the Record Date.
• Each subscription right will entitle the holder to purchase 0.01734 shares of common stock of the reorganized Company following its emergence from the Chapter 11 cases (the “Rights Offering Shares”), at the anticipated subscription price of $8.21710 per whole Rights Offering Share. The subscription price may decrease, however, depending on (i) treatment elections by Core Scientific’s miner equipment lenders (“Equipment Lender Elections”) under the Plan and (ii) the extent to which the estimated maximum amount of disputed claims become allowed in Class 8 (General Unsecured Claims) and Class 11 (Section 510 Clams) in the Chapter 11 cases, resulting in a higher number of Rights Offering Shares to be offered in the Rights Offering. However, the total subscription price will not change. Core Scientific’s assumptions regarding Equipment Lender Elections and the estimated maximum amount of disputed claims are subject to change.
• No fractional Rights Offering Share will be issued in the Rights Offering. Any fractional Rights Offering Shares created by exercise of Subscription Rights will be rounded down to the nearest whole share.
• The subscription rights and oversubscription rights (described below) are non-transferrable.
• The Rights Offering commenced on November 20, 2023.
• The Rights Offering expires at 5:00pm, New York City Time, on December 11, 2023.
• Holders of Existing Common Interests that hold such interests through a bank, broker, or other financial institution (a “Subscription Nominee) in “street name” with the Depository Trust Company (“DTC”), must direct their Subscription Nominee to tender their Existing Common Interests through DTC’s Automated Tender Offer Program by 5:00pm, on December 11, 2023.
• Participation in the Rights Offering is optional for holders of Existing Common Interests, and the treatment of Existing Common Interests in the Chapter 11 cases, as described in the Plan and Disclosure Statement, will not be impacted by whether holders of Existing Common Interests participate in the Rights Offering or not.

The Rights Offering will include an over-subscription right to permit each holder that exercises its basic subscription rights in full to purchase additional Rights Offering Shares (if any) that remain unsubscribed at the expiration of the Rights Offering. If the aggregate subscriptions (basic subscriptions plus over-subscriptions) exceed the number of Rights Offering Shares offered in the Rights Offering, then the aggregate over-subscription amount will be pro-rated among the holders exercising their respective oversubscription rights based on the number of Rights Offering Shares each holder has subscribed pursuant to its exercise of oversubscription rights.

In connection with the Rights Offering, as of November 17, 2023, the Company entered into a backstop commitment letter with several parties, pursuant to which the parties have agreed, in the aggregate, to purchase up to $37.1 million of Rights Offering Shares (the “Backstop Commitment”) to the extent the Rights Offering does not raise funds equal to, or in excess of the Backstop Commitment. The backstop commitment letter is subject to customary terms and conditions, including a backstop commitment premium payable in shares of common stock of the Company following its emergence from the Chapter 11 cases in a number equal to 20% of the Backstop Commitment.

The terms of the Rights Offering and the information presented herein anticipates that in connection with the reorganization described in the Plan and Disclosure Statement, holders of Existing Common Interests will receive a number of new shares of Core Scientific in exchange for their Existing Common Interests that is expected to be 1/25th of the number of shares held on November 20, 2023 (such ratio is subject to change). Core Scientific’s current share price (OTC: CORZQ) does not reflect the reorganization of the Company as described in the Plan and Disclosure Statement, including the Rights Offering described therein, and is not expected to be indicative of reorganized Core Scientific’s post-emergence share price.

The information herein is not complete and is subject to change. This press release does not constitute an offer to sell or the solicitation of an offer to buy any of the subscription rights, Rights Offering Shares or any other securities, nor will there be any sale of the subscription rights, oversubscription rights, Rights Offering Shares or any other securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful. This press release is not an offering. For any questions or further information about the rights offering, or to obtain a copy of the Rights Offering Procedures, Plan or Disclosure Statement, each as amended and supplemented, please contact Stretto, Inc. which will be acting as the subscription agent for the Rights Offering, at (888) 317-1417 (Domestic) or (929) 399-0959 (International) or via email at [email protected].

Additional information about the Rights Offering is available in the Rights Offering Procedures, the Plan and the related Disclosure Statement, each as amended and supplemented, which have been filed with the Bankruptcy Court and made available at the Company’s restructuring website at https://cases.stretto.com/corescientific/.

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