Core Scientific secures US$600m credit and LC facilities to unlock US$300m cash

Core Scientific has arranged US$600m of committed senior secured bank facilities, combining a US$100m revolver with a US$500m letter-of-credit line in a structure expected to release approximately US$300m of cash currently tied up as collateral.

The digital-infrastructure group announced the financing on 27 August after signing the credit agreement on 25 August. The revolver can be used for working capital and general corporate purposes, while the much larger LC facility provides credit support for project obligations, including commitments under utility agreements.

That split gives the transaction a notable working-capital and treasury dimension. Rather than raising US$600m of immediately drawn cash, Core Scientific is using bank commitments partly to substitute letters of credit for cash collateral that would otherwise remain restricted. The company expects that substitution to free roughly US$300m and improve usable liquidity.

Borrowings under the three-year revolver are priced at adjusted term SOFR plus 1.75%, or an alternate base rate plus 0.75%. Outstanding letters of credit carry an annual 1.75% fee plus a 0.125% fronting charge. The facilities are guaranteed by certain wholly owned domestic subsidiaries and secured by first-priority liens over substantially all assets of the borrower and guarantors.

Morgan Stanley Senior Funding acted as lead left arranger and joint bookrunner. JPMorgan is administrative and collateral agent as well as a joint lead arranger and bookrunner, alongside Goldman Sachs and TD Securities. Commitments were expected to be shared equally among the four institutions at closing.

The financing illustrates how letters of credit can have a direct liquidity effect even when they are not drawn as loans. Companies developing power-intensive infrastructure frequently have to provide collateral or credit support to utilities and other counterparties. Replacing cash security with bank-issued LCs can return capital to the operating business while leaving counterparties with contracted credit protection.

Core Scientific had no amounts outstanding under either facility at closing, according to its filing, meaning the transaction initially creates liquidity headroom rather than adding US$600m of funded debt.