7th Oct 2022 10:38
(Alliance News) - Argo Blockchain PLC on Friday announced several actions to strengthen the company's balance sheet as it faces headwinds from rising energy prices and falling bitcoin prices.
The London-based blockchain technology company has amended an existing equipment financing agreement with New York Digital Investment Group LLC. The amendment releases about GBP5.0 million of restricted cash and modifies the amortisation schedule for the company's existing loans.
The transaction "significantly reduces" the company's debt service payments and links future payments of loans from New York Digital Investment Group to network mining profitability. In exchange, Argo Blockchain will provide an expanded collateral package.
The company has also signed an agreement to sell to a third party 3,400 new Bitmain S19J Pro machines for GBP6.0million. Argo will host these machines for the third party at its Helios mining facility according to a hosting services agreement announced in September. The agreement includes a profit sharing clause as well.
Finally, Argo Blockchain announced the conditional subscription of GBP24 million through the placing 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 unnamed investor will hold 15% of the enlarged share capital if the deal goes through.
The subscription is expected to be completed within the next 30 days.
The announcements come after the company reported reduced profitability and free cash flow generation earlier in September. It noted that it has seen "headwinds from the price of both natural gas and electricity caused by the geopolitical situation in Europe and low levels of natural gas storage in the United States."
This, coupled with the decline in the price of Bitcoin since March 2022 and the increased mining difficulty, have created a difficult outlook for Argo Blockchain.
Chief Executive Officer Peter Wall said: "We have worked relentlessly to create and execute on a strategy that will support our objective of sustainable growth for the company. We also understand the importance of maintaining flexibility in our approach in order to respond swiftly to external factors. We are glad to have a strong relationship with our lender New York Digital Investment Group, who has been working with us to provide flexibility and to help ensure the long term success of the company."
Shares in Argo Blockchain were trading 14% lower at 29.39 pence each in London on Friday morning.
By Chris Dorrell; [email protected]
Copyright 2022 Alliance News Limited. All Rights Reserved.
Related Shares:
Argo Blockchai.