Hut 8 Mining (TSX: HUT) is looking to strengthen its balance sheet, announcing this morning that it has finalized plans to repay an outstanding loan. The loan, which currently sits at US$20.0 million, is currently held by Genesis Global Capital.
The repayment of the loan, which is to occur in mid-February following a mandatory one-month repayment notice, will see the company reduce capital expenditures by US$1.6 million per year due to the reduced interest expense. The repayment will also see the company generate US$0.8 million in interest income.
This income is a function of the original justification for its loan. The loan effectively enabled the company to hold a larger bitcoin balance, while using its bitcoin as collateral for the loan. With bitcoin appreciating more than the 8% per annum interest on the loan, the strategy worked well for the company. That bitcoin previously used as collateral however will now instead be used in a yield account, which is expected to generate income of US$0.8 million per year.
The repayment of the loan follows the company securing $77.5 million via a financing conducted with several US institutions.
Hut 9 Mining last traded at $4.98 on the TSX.
Information for this briefing was found via Sedar and Hut 8 Mining Corp. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
