Stronghold Digital Mining Strengthens Financial Position through Credit Agreement Amendment and Two-Year Foundry Hosting Agreement

NEW YORK, Feb. 07, 2023 (GLOBE NEWSWIRE) -- Stronghold Digital Mining, Inc. (NASDAQ: SDIG) (“Stronghold”, or the “Company”) today announced that it, its affiliate, Stronghold Digital Mining Holdings, LLC (“Borrower”), and each subsidiary of Borrower have entered into an agreement (the “Amended Credit Agreement”) to substantially amend its credit agreement dated October 27, 2022 (the “Original Credit Agreement”) with Whitehawk Finance LLC and/or its affiliates or designees and the other lenders from time to time party hereto (collectively, the “Lenders”) and Whitehawk Capital Partners LP as collateral agent for the Lenders and as administrative agent for the Lenders. Separately, the Company entered into a new two-year hosting agreement with Foundry Digital LLC (“Foundry”), replacing its previously announced temporary hosting agreement.

Amended Credit Agreement

The Amended Credit Agreement is designed to provide Stronghold with significantly enhanced liquidity and financial flexibility. The Company and the Lenders have agreed to the following key terms:

• No mandatory principal amortization payments until July 2024. Based on the Original Credit Agreement, Stronghold was required to pay approximately $29 million in cumulative monthly principal amortization through June 2024.
• Principal repayment through cash sweep. Following a five-month complete amortization holiday, beginning in June 2023, at the end of each month, Stronghold will repay the principal amount of debt outstanding through a monthly cash sweep calculated as 50% of the average daily cash balance for the month in excess of $7.5 million.
• Option to pay interest in kind for up to six months. If Stronghold’s average daily cash balance during a month is less than $5 million, the Company may elect to pay interest in kind, instead of using cash, for the respective month.
• Elimination of all leverage covenants before Q3 2024. Beginning on September 30, 2024 and at the end of each quarter thereafter, a 4.0:1.0 net debt-to-EBITDA ratio covenant applies.
• Reduced minimum liquidity covenants. The minimum allowable liquidity (defined as unrestricted cash plus Bitcoin), at any given time, is $2.5 million through March 31, 2024, $5.0 million from April 1, 2024 through December 31, 2024, and $7.5 million thereafter.
• No dilution. No equity will be issued in relation to the Amended Credit Agreement.

“With a lot of hard but necessary work, we have successfully restructured nearly our entire balance sheet to make the Company more resilient, and I am very excited about the next phase for Stronghold,” said Greg Beard, co-chairman and chief executive officer of Stronghold. “Our efforts to anticipate and respond proactively to challenges in our markets while prioritizing liquidity have helped us endure through this environment. With this amendment and our previously announced convertible debt exchange agreement, which remains on track to close this month, we will have removed all material mandatory principal repayments through the middle of 2024. We believe this puts Stronghold on course to capture significant value from our key markets, power and Bitcoin.”