Sec Form 13D Filing - BlackRock Inc. (BLK) filing for Core Scientific Inc. (CORZ) - 2023-11-27

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No.    )*

Core Scientific, Inc.

(Name of Issuer)

Common Stock

(Title of Class of Securities)

21873J108

(CUSIP Number)

David Maryles

Managing Director, Legal and Compliance

BlackRock, Inc.

50 Hudson Yards

New York, NY 10001

(212) 810-5300

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

November 16, 2023

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.  ☐

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No. 21873J108

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Item 1. Security and Issuer.

This Schedule 13D (this “Schedule 13D”) relates to the common stock, par value $0.0001 per share (the “Common Stock”), of Core Scientific, Inc., a Delaware corporation (the “Issuer”). The principal executive offices of the Issuer are located at 210 Barton Springs Road, Suite 300, Austin, Texas 78704.

Item 2. Identity and Background.

(a) This Schedule 13D is being filed by BlackRock, Inc. (“BlackRock”). BlackRock is a Delaware corporation that, through its subsidiaries, provides diversified investment management directly and indirectly through various investment products to institutions, intermediaries and individual investors. Investment management services primarily consist of the management of equity, fixed income, multi-asset class, alternative investment and cash management products. BlackRock, through its subsidiaries (each an “Advisory Subsidiary” and collectively the “Advisory Subsidiaries”), offers its investment products in a variety of accounts, including open-end and closed-end mutual funds, iShares^® exchange-traded funds, collective investment trusts and separate accounts. In addition, the Advisory Subsidiaries provide market risk management, financial markets advisory and enterprise investment system services to a broad base of clients. Financial markets advisory services include valuation services relating to illiquid securities, dispositions and workout assignments (including long-term portfolio liquidation assignments), risk management and strategic planning and execution. The principal office and business address of BlackRock is 50 Hudson Yards, New York, NY 10001.

BlackRock did not acquire beneficial ownership of any securities of the Issuer with the purpose or effect of changing or influencing the control of the Issuer or as a participant in any transaction having such purpose or effect, or in connection with any plan or proposal that would be subject to disclosure under Item 4 of Schedule 13D with respect to the Issuer. The Advisory Subsidiaries, as the investment advisers to certain client accounts, continue to hold Common Stock in their ordinary course of business, not with the purpose or effect of changing or influencing the control of the Issuer or as a participant in any transaction having such purpose or effect, and not in connection with any plan or proposal that would be subject to disclosure under Item 4 of Schedule 13D with respect to the Issuer. However, BlackRock is filing this Schedule 13D because certain of its affiliates have taken actions described in Item 4 below.

(b) – (c) and (f) Current information concerning the identity and background of each of the executive officers and directors of BlackRock, as well as applicable additional information called for by Items 3 through 6, is set forth on Annex A (collectively, the “Covered Persons”), attached hereto and incorporated herein by reference.

(d) and (e) During the last five years, neither BlackRock, nor to the best of its knowledge, any Covered Person has been convicted in any criminal proceedings (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

Neither the present filing nor anything contained herein shall be construed as an admission that BlackRock constitutes a “person” for any purposes other than Section 13(d) of the Exchange Act.

Item 3. Source and Amount of Funds or Other Consideration.

As of November 16, 2023, BlackRock, in its role as the parent of the Advisory Subsidiaries in the capacity as investment advisers to certain client accounts, held beneficial ownership of 5,011,718 shares of Common Stock that are issuable upon conversion of approximately $40.1 million in aggregate principal amount of secured convertible notes acquired for an aggregate purchase price of approximately $35 million. Such acquisitions were made for investment purposes with available funds of the applicable client accounts in the ordinary course of business of the Advisory Subsidiaries.

Transactions made for investment purposes in the ordinary course of business of the Advisory Subsidiaries are undertaken solely for the benefit of the applicable client account and, other than with respect to the Managed Funds (as defined below), are independent from the matters described in Item 4 below. See Annex A for applicable information regarding Covered Persons.

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Item 4. Purpose of Transaction.

All of the Common Stock of the Issuer reported on this Schedule 13D was acquired in the ordinary course of business for investment purposes by funds and accounts for which certain of the Advisory Subsidiaries act as investment advisers.

On November 16, 2023, certain funds and accounts managed by subsidiaries of BlackRock that hold secured convertible notes of the Issuer (such funds and accounts managed by subsidiaries of BlackRock, collectively, the “Managed Funds”) entered into a Restructuring Support Agreement (the “Support Agreement”) with the Issuer and (x) certain other holders of (i) approximately 93% in aggregate principal amount outstanding of the Issuer’s Convertible Notes issued pursuant to the April Convertible Notes Purchase Agreement and (ii) approximately 80% in aggregate principal amount outstanding of the Issuer’s Convertible Notes issued pursuant to the August Convertible Notes Purchase Agreement (collectively, the “Consenting Creditors”), (y) the official committee of equity security holders in the Chapter 11 Cases (the “Equity Committee”), and (z) the members of the Equity Committee, excluding Foundry Digital LLC (such members, the “Equity Committee Members” and, collectively with the Consenting Creditors and the Equity Committee, the “RSA Parties”), which represents an agreement between the Company and the RSA Parties regarding the terms of certain restructuring transactions (such transactions, collectively, the “Restructuring”). Among other things, pursuant to the Support Agreement, the Consenting Creditors and the Equity Committee Members have agreed to vote in favor of the Plan and the RSA Parties have agreed to support consummation of the Restructuring contemplated by the Plan. Capitalized terms used but not defined in this Schedule 13D have the meanings ascribed to them in the Support Agreement, as applicable.

The Support Agreement and the Plan contemplate, among other things:

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The Support Agreement further provides that the Debtors shall achieve certain future milestones with respect to the Chapter 11 Cases, including:

In accordance with the Support Agreement, the Debtors agreed, among other things, to: (a) support and take all steps necessary and desirable to consummate the Restructuring and Restructuring Transactions contemplated by the Plan; (b) to the extent any legal or structural impediment arises that would prevent, hinder, or delay the consummation of the Restructuring or the Restructuring Transactions contemplated by the Plan, negotiate in good faith and take all reasonable steps necessary or reasonably requested by the Consenting Creditors or Equity Committee to address any such impediment; and (c) negotiate in good faith and use commercially reasonable efforts to execute, deliver, perform its obligations under, and consummate the transactions contemplated.

In accordance with the Support Agreement, the Consenting Creditors agreed, among other things, to: (a) vote their Claims and Interests to accept the Plan; (b) timely vote their Claims and Interests against any Alternative Restructuring; (c) use commercially reasonable efforts to support and take all actions reasonably requested by the Company to support the Restructuring and the Restructuring Transactions contemplated by the Plan; and (d) except as permitted in the Support Agreement, not transfer any Claims or Interests held by such Consenting Creditors.

In accordance with the Support Agreement, the Equity Committee and Equity Committee Members agreed, among other things, to, (a) in the case of the Equity Committee Members, vote their Claims and Interests to accept the Plan; (b) in the case of Equity Committee Members, timely vote their Claims and Interests against any Alternative Restructuring; (c) use commercially reasonable efforts to encourage the Backstop Parties to vote their Claims and Interest to accept the Plan; and (d) not object to, delay, impede, or take any other action to interfere with acceptance, implementation, or consummation of the Restructuring or the Restructuring Transactions contemplated by the Plan.

The Support Agreement further provides that the Consenting Creditors, the Equity Committee, and Equity Committee Members, as applicable, shall have the right, but not the obligation, to terminate the Support Agreement upon the occurrence of certain events, including, among other things, (a) the failure of the Debtors to achieve the milestones set forth in the Support Agreement (unless waived or extended in accordance with the Support Agreement); (b) with respect to the Consenting Creditors, termination of the commitments under the Backstop Commitment Letter or termination, after the execution thereof, of the Exit Facility Commitment Letter; and (c) with respect to the Equity Committee, if the Equity Committee determines in good faith and upon the written advice of the Equity Committee Advisors that the Restructuring is not in the best interests of Holders of Class 12 Existing Common Interests and continued support would be inconsistent with the exercise of its fiduciary duties under applicable Law. The Support Agreement permits the Debtors to terminate the Support Agreement if, among other things, (i) the special committee of the board of directors of the Company determines in good faith, after consultation with outside counsel, that the Restructuring is not in the best interests of the Debtors’ estates and continued support for the Restructuring would be inconsistent with the exercise of its fiduciary duties (subject to certain conditions), and (ii) the Exit Facility Commitment Parties do not execute the Exit Facility Commitment Letter within two weeks following the Support Effective Date, subject to the extension of such date with the consent of the Debtors and the Requisite Consenting Creditors.

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The foregoing description of the Support Agreement and the transactions and documents contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the Support Agreement which is filed as Exhibit 1 hereto and incorporated by reference herein.

As a result of the foregoing, BlackRock may be deemed to have formed a “group,” as such term is used in Regulation 13D under the Act with the other parties to the Support Agreement. BlackRock disclaims any membership or participation in a “group” with such other parties to the Support Agreement or their affiliates and further disclaims beneficial ownership of any shares of Common Stock beneficially owned by any such parties or their affiliates, including approximately 16.5 million shares of Common Stock believed to be beneficially owned by funds and accounts managed or advised by Gullane Capital LLC or its affiliates on the date hereof.

Except as set forth in this Schedule 13D and in the Support Agreement, the activities described herein will not restrict BlackRock’s Advisory Subsidiaries’ exercise of investment or voting power with respect to the Common Stock to which this Schedule 13D relates. Except as set forth in this Schedule 13D, BlackRock has no present plans or proposals that relate to or would result in any of the actions described in Item 4(a) through (j) of Schedule 13D. Each of BlackRock’s Advisory Subsidiaries may evaluate on a continuing basis its client accounts’ investment in the Issuer and BlackRock expects that such Advisory Subsidiaries may, subject to the terms of the Support Agreement where applicable, from time to time acquire or dispose of Common Stock or other securities of the Issuer on behalf of such client accounts. Any acquisitions or dispositions will depend upon (i) the price and availability of the Issuer’s securities; (ii) subsequent development s concerning the Issuer’s business and prospects and the industry in which the Issuer operates; (iii) BlackRock’s Advisory Subsidiaries’ general investment policies with respect to the applicable accounts managed by BlackRock’s Advisory Subsidiaries; (iv) other investment and business opportunities available to BlackRock’s Advisory Subsidiaries on behalf of their clients; (v) general market and economic conditions; (vi) tax considerations; and (vii) such other factors as BlackRock’s Advisory Subsidiaries may consider relevant. Any such acquisitions or dispositions may be made, subject to applicable law, in open market transactions or privately negotiated transactions.

See Annex A for applicable information regarding Covered Persons.

Item 5. Interest in Securities of the Issuer.

(a) and (b) The responses of BlackRock to Rows (7) through (11), and (13) of the cover page of this Schedule 13D are incorporated herein by reference. See Annex A for applicable information regarding Covered Persons. In addition, pursuant to Section 13(d)(3) of the Exchange Act, BlackRock and the other parties to the Support Agreement may, on the basis of the facts described elsewhere in this Schedule 13D, be considered to be a “group.” BlackRock disclaims any membership or participation in a “group” with such other parties to the Support Agreement or their affiliates and further disclaims beneficial ownership of any shares of Common Stock beneficially owned by such parties or their affiliates, including approximately 16.5 million shares of Common Stock believed to be beneficially owned by Gullane Capital LLC or its affiliates on the date hereof.

The aggregate percentage of shares of Common Stock reported as beneficially owned by BlackRock was calculated based on 386,021,602 shares of Common Stock issued and outstanding as of October 30, 2023, as disclosed in the Issuer’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2023 filed with the U.S. Securities and Exchange Commission on November 6, 2023.

The Common Stock beneficially owned by BlackRock includes Common Stock beneficially owned by its Advisory Subsidiary, BlackRock Financial Management, Inc.

(c) None.

(d) Except for investment advisory clients of the Advisory Subsidiaries, who may have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, Common Stock, no other person is known by BlackRock to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, any Common Stock that may be beneficially owned by BlackRock.

(e) Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

The information set forth in Item 4 is hereby incorporated herein by reference.

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In August 2021, the Managed Funds entered into a secured convertible note purchase agreement with the Issuer and the other investors thereunder pursuant to which the Issuer issued $299.8 million of convertible notes in August through November 2021, including approximately $35 million to such Managed Funds, which notes became secured notes upon consummation of the business combination transaction in January 2022. The secured convertible notes have a minimum payoff based on the face value plus accrued interest and are secured by a lien on the same collateral securing the $215 million of secured convertible notes issued by the Issuer in April 2021. The secured convertible notes have a maturity date of April 2025 and bear interest at a rate of 10% per annum, of which 4% is payable in cash and 6% is payable in kind. The convertible notes are convertible into shares of Common Stock at the option of the holder at a conversion price equal to $8.00 per share. As of November 16, 2023, after giving effect to the receipt by the Managed Funds of the interest payable in kind on such secured convertible notes through such date, the Managed Funds held approximately $40.1 million in aggregate principal amount of secured convertible notes. The foregoing description of the secured convertible note purchase agreement does not purport to be complete and is qualified in its entirety by reference to the Convertible Note Purchase Agreement, the First Amendment to Convertible Note Purchase Agreement and the form of Convertible Promissory Note, which are filed as Exhibits 2 through 4 hereto and incorporated by reference herein.

Except as set forth in this Schedule 13D and in the Support Agreement, there are no contracts, arrangements, understandings or relationships between BlackRock and any other person with respect to any securities of the Issuer or among the Advisory Subsidiaries, including but not limited to transfer or voting of any securities of the Issuer, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies (other than the transfer of voting rights with respect to shares of Common Stock that are loaned out in the ordinary course of BlackRock’s and its subsidiaries’ securities lending programs).

Item 7. Materials to Be Filed as Exhibits.

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SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: November 27, 2023

Annex A

The following is a list of the executive officers and directors of BlackRock, Inc. (collectively, the “Covered Persons”), setting forth the present principal occupation or employment and the name, principal business and address of any corporation or other organization in which such employment is conducted and citizenship for each such person. Each Covered Person is a citizen of the United States, unless otherwise noted, and does not have any other principal occupation (outside of similar positions held with respect to other entities directly or indirectly managed or advised by BlackRock).

Executive Officers

A-1

Directors

A-2

A-3