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Hut 8 locks in $1B credit line, but faces 40% liquidity rules

Diagram of Hut 8’s $1.07 billion secured parent credit line, showing borrowing and letters of credit within one commitment, parent guarantees and liens, and the separate earlier non-recourse project financing.

Bitcoin miner Hut 8 announced on Sept. 28 that it had closed a four-year, $1 billion senior secured credit line.

The facility provides the guardian firm room to borrow throughout web site growth and to again building obligations with letters of credit. Its securities filing says no quantities had been excellent when the settlement closed on Sept. 24.

Hut 8 says letters of credit can support interconnection deposits and obligations to utilities and gear distributors, lowering the money it must put up as collateral. The $1 billion letter-of-credit sublimit is contained inside the total dedication.

In impact, the road gives two methods to make use of a single pool of financial institution capability: borrowing money or securing eligible obligations.

Flexibility for growth, publicity on the guardian

Hut 8’s June 30 balance sheet listed $233.6 million in money, with restricted funds reported individually.

The line may also help bridge interim growth wants whereas Hut 8 decides when to rearrange longer-term venture financing, in keeping with the corporate. That timing provides the guardian a financing choice whereas tasks transfer by means of their earlier levels.

Diagram of Hut 8’s $1.07 billion secured parent credit line, showing borrowing and letters of credit within one commitment, parent guarantees and liens, and the separate earlier non-recourse project financing.
Hut 8’s $1.07 billion secured revolver helps borrowing or letters of credit, with nothing excellent at closing.

The new settlement names Hut 8 Corp. as borrower. Certain restricted subsidiaries assure its obligations, and first-priority liens cowl considerably all property of the borrower and guarantors, topic to exclusions.

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Hut 8 described $7.5 billion of earlier financing for its River Bend and Beacon Point AI campuses as non-recourse venture financing. Use of the brand new line may create secured obligations on the guardian and guarantor degree alongside these venture buildings.

If Hut 8 chooses Term SOFR loans, the preliminary margin is 1.75 share factors above the benchmark. That margin can vary from 1.50 to 2.00 factors as the corporate’s debt-to-market-capitalization ratio adjustments.

The settlement additionally restricts sure further debt and liens, topic to {qualifications}, and a minimum-liquidity covenant starting with the quarter ending March 31, 2027.

Its threshold is 40% of commitments earlier than an outlined stabilization date and 25% afterward, measured utilizing the settlement’s definition of liquidity and topic to fairness remedy rights. How a lot Hut 8 finally borrows or points in letters of credit will decide the size of its parent-level obligations.

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