Bitfarms Reaches $7.8 Million Settlement On $21 Million Debt Facility
It appears that a gamble by Bitfarms Ltd (TSX: BITF) to default on its debt as a means of renegotiating a loan has paid off handsomely for the company.
In mid-January, the firm indicated via press release that it was considering defaulting on a loan between Backbone Mining Solutions, a subsidiary of the Bitfarms, and that of BlockFi Lending. The debt was related to a $32 million equipment financing facility, with the value of the security significantly underwater as a result of the equipment depreciating so quickly.
Bitfarms at the time said the equipment was worth roughly just $5.0 million, resulting in a loan to value of over 400%.
With $21 million in debt remaining, which was secured just by the equipment that debt purchased and some of the related bitcoin, Bitfarms debated taking a gamble by defaulting on the debt to force renegotiations. That gamble evidently worked, with the company this morning revealing that its $21 million debt obligation was reduced down to $7.75 million, which is to be paid via a single cash payment.
That payment was reportedly made on February 8, with its assets under the Backbone Mining Solutions subsidiary now unencumbered.
READ: Bitfarms Sees Flat Bitcoin Production In January As Debt Paydown Continues
“Lowering our debt nearly 85% from a high of $165 million in June 2022 to $25 million today has significantly decreased principal and interest obligations, which boosts our cash flow and positions us well for future growth,” commented CFO Jeff Lucas.
The company as a result of the settlement expects to be debt free before February 2024.
Bitfarms last traded at $1.43 on the TSX.
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As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.
