Stronghold announces credit agreement amendment, hosting agreement

Stronghold Digital announced that it, its affiliate, Stronghold Digital Mining Holdings, and each subsidiary of Borrower have entered into an agreement to substantially amend its credit agreement dated October 27, 2022 with Whitehawk Finance LLC and/or its affiliates or designees and the other lenders from time to time party hereto and Whitehawk Capital Partners LP as collateral agent for the Lenders and as administrative agent for the Lenders. Separately, the Company entered into a new two-year hosting agreement with Foundry Digital, replacing its previously announced temporary hosting agreement. The Amended Credit Agreement is designed to provide Stronghold with significantly enhanced liquidity and financial flexibility. The Company and the Lenders have agreed to the following key terms: No mandatory principal amortization payments until July 2024. Based on the Original Credit Agreement, Stronghold was required to pay approximately $29 million in cumulative monthly principal amortization through June 2024. Principal repayment through cash sweep. Following a five-month complete amortization holiday, beginning in June 2023, at the end of each month, Stronghold will repay the principal amount of debt outstanding through a monthly cash sweep calculated as 50% of the average daily cash balance for the month in excess of $7.5 million. Option to pay interest in kind for up to six months. If Stronghold’s average daily cash balance during a month is less than $5 million, the Company may elect to pay interest in kind, instead of using cash, for the respective month. Elimination of all leverage covenants before Q3 2024. Beginning on September 30, 2024 and at the end of each quarter thereafter, a 4.0:1.0 net debt-to-EBITDA ratio covenant applies. Reduced minimum liquidity covenants. The minimum allowable liquidity, at any given time, is $2.5 million through March 31, 2024, $5.0 million from April 1, 2024 through December 31, 2024, and $7.5 million thereafter. No dilution. No equity will be issued in relation to the Amended Credit Agreement. On February 6, 2023, the Company signed a two-year hosting agreement with Foundry, replacing the previous hosting agreement entered into on November 7, 2022. The New Foundry Hosting Agreement applies to the same Bitcoin mining fleet of approximately 4,500 miners with total hash rate capacity of approximately 420 PH/s and average efficiency of approximately 35 J/TH. The New Foundry Hosting Agreement has similar terms to the previous hosting agreement, with a few notable differences: The agreement term is two years, with no unilateral early termination option. The applicable hosting fee will be the realized net cost of power at the Company’s Panther Creek Plant plus 10%, calculated on a monthly basis. Foundry will participate in profit generated from selling power to the grid when miners are curtailed.