Greenidge secures credit support with equity deal

Greenidge Generation Holdings Inc. (NASDAQ:GREE), a finance services firm specializing in crypto assets with a market capitalization of $17.27 million, has entered into an Equity Interest Payment Agreement with Atlas (NYSE:ATCO) Capital Resources GP LLC to maintain credit support.

According to InvestingPro data, the company operates with a significant debt burden, with a total debt to capital ratio of 0.79. On January 24, 2025, the agreement was established to ensure the continuation of certain letters of credit vital for the company’s environmental and pipeline project obligations.

Under the terms of the new deal, Atlas will keep the letters of credit active until their renewal dates in April and May 2025. These letters are critical for guaranteeing the current value of Greenidge’s landfill environmental trust liability and contractual commitments to Empire Pipeline Incorporated. If Atlas had not agreed to maintain these letters, they could have required Greenidge to replace them.

In exchange, Greenidge has agreed to make a payment of $1,369,990 and to cover the interest on the outstanding amount of the letters of credit quarterly. These payments will be made in shares of Greenidge’s Class A common stock, following the price formulas outlined in the agreement. The company is required to complete the initial payment within seven business days of signing the agreement, and interest payments will follow on a calendar quarter basis in arrears.

Additionally, Atlas has been granted certain demand and piggyback registration rights for all shares of Class A Common Stock (or other equity securities convertible into Class A Common Stock) they hold. This arrangement provides Atlas with the option to request a customary registration rights agreement, further solidifying their investment relationship with Greenidge.

This strategic financial maneuver allows Greenidge to secure the necessary credit support without immediate cash outlay, while Atlas potentially benefits from the equity arrangement. The specifics of the Equity Interest Payment Agreement can be found in Exhibit 10.1 attached to the Form 8-K filed by Greenidge. With the stock down nearly 60% over the past year and trading at $1.51, InvestingPro’s Fair Value analysis suggests the stock may be undervalued.

InvestingPro analysis reveals the company’s challenging financial position, with negative free cash flow of $28.15 million and an overall Financial Health Score rated as WEAK. InvestingPro subscribers have access to 15 additional key insights about Greenidge’s financial health and future prospects.

In other recent news, Greenidge Generation Holdings Inc. announced an expansion of its equity incentive plan by 700,000 shares, raising the total to 1,583,111 shares of Class A common stock. This decision is part of the Second Amended and Restated 2021 Equity Incentive Plan, aimed at providing additional incentives to the company’s employees and directors. The company has also been granted an extension on the suspension of operations at its Dresden, New York facility until November 14, 2024, following a legal challenge over the denial of the facility’s Title V Air Permit renewal.

In the financial sphere, Greenidge reported a reduction in SG&A expenses by approximately $9.1 million year-to-date compared to the same period in 2023. However, the company also reported a net loss from continuing operations of $6.6 million, with an adjusted EBITDA loss of $0.4 million.

In the cryptocurrency mining sector, Greenidge produced approximately 167 bitcoin in the third quarter, with 54 mined through proprietary operations and 113 for datacenter hosting clients. The company’s mining fleet consists of approximately 29,000 bitcoin miners, with an estimated total hash rate capacity of 3.1 EH/s. Looking forward, Greenidge plans to continue upgrading its miner fleet with newer generation miners, secure additional sites for development, and potentially monetize certain assets.

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