Argo Blockchain PLC on Friday announced several actions aimed at strengthening the company’s balance sheet as it faces headwinds from rising energy prices and falling bitcoin prices.
The London-based blockchain technology company amended an existing equipment financing agreement with New York Digital Investment Group LLC. The amendment releases approximately £5.0 million of restricted cash and changes the amortization schedule for the company’s existing loans.
The transaction “significantly reduces” the company’s debt service payments and ties future New York Digital Investment Group loan payments to the profitability of mining the network. In exchange, Argo Blockchain will provide an expanded set of guarantees.
The company has also signed an agreement to sell 3,400 new Bitmain S19J Pro machines to a third party for £6.0 million. Argo will host these machines for the third party at its Helios mining facility under a hosting services agreement announced in September. The agreement also includes a profit sharing clause.
Finally, Argo Blockchain announced the conditional subscription of £24 million through the placement of 87 million shares at 0.276 pence each. Assuming completion, the net proceeds will be used for “working capital and general corporate purposes”. The anonymous investor will hold 15% of the enlarged share capital if the operation materializes.
The subscription should be finalized within the next 30 days.
The announcements come after the company reported declines in profitability and free cash flow generation earlier in September. He noted that he has seen “natural gas and electricity price headwinds caused by the geopolitical situation in Europe and low natural gas storage levels in the United States.”
This, coupled with the decline in the price of Bitcoin since March 2022 and the increased difficulty of mining, has created a difficult outlook for Argo Blockchain.
CEO Peter Wall said, “We have worked tirelessly to create and implement a strategy that will support our goal of sustainable growth for the business. We also understand the importance of maintaining flexibility in our approach in order to react quickly to external factors. We are pleased to have a strong relationship with our lender New York Digital Investment Group, who have worked with us to provide flexibility and to help ensure the long-term success of the business.
Shares of Argo Blockchain were trading down 14% at 29.39 pence apiece in London on Friday morning.
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