Why Did Hut 8 Corp. Engage in a Stalking Horse Bid For Natural Gas Power Plants and Bitcoin Mine?

Hut 8's Successful Stalking Horse Bid for Natural Gas Power Plants and Bitcoin Mine

In a significant development within the digital asset mining and high-performance computing infrastructure industry, Hut 8 Corp. (Nasdaq | TSX: HUT), a prominent player in North America, has emerged victorious in a bidding process initiated by KSV Restructuring Inc. ("KSV"). The company's Stalking Horse Bid, submitted in collaboration with Macquarie Equipment Finance Ltd. , a subsidiary of the global financial services group Macquarie Group Limited, has been declared the successful bid following a sale and investment solicitation process (SISP) conducted by KSV.

The Sale and Investment Solicitation Process (SISP)

The SISP was executed concerning the sale of specific assets belonging to Validus Power Corp. ("Validus") and its subsidiaries, collectively referred to as the "Validus Entities.

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" Pending final approval from the Ontario Superior Court of Justice (Commercial List), this successful bid will lead to the establishment of a new Ontario subsidiary of Hut 8, known as BidCo. In this newly formed entity, Macquarie will hold a minority equity interest of approximately 20%, while a subsidiary of Hut 8 will assume the majority ownership with the remaining 80%.

Acquisition of Four Natural Gas Power Plants

Upon the completion of the Stalking Horse Bid, BidCo is set to take possession of four natural gas power plants situated in Ontario. These power plants include:

A 40 MW facility in Kapuskasing
A 110 MW facility in Kingston
A 120 MW facility in Iroquois Falls
A 40 MW facility along with a Bitcoin mining operation in North Bay

Secured Funding Arrangement and Resolution of Litigation Claims

In addition to the power plants' acquisition, the Stalking Horse Bid also entails a secured funding arrangement between Macquarie, BidCo, and Hut 8 in the form of an operating lease facility. Notably, the successful completion of this bid is expected to bring a definitive resolution to all ongoing litigation claims and counterclaims involving Hut 8 and certain Validus Entities.

Conditions and Anticipated Timeline

While the Stalking Horse Bid marks a significant milestone for Hut 8, its completion is contingent upon specific conditions, including approval and vesting orders from the Court and the fulfillment of standard closing conditions. The company is now focused on seeking the Court's final approval for the Stalking Horse Bid, with the completion expected to take place in January 2024.

About Hut 8 Corp.

Hut 8 Corp. , headquartered in Miami, Florida, is poised at the forefront of infrastructure and energy convergence, effectively harnessing the potential of Bitcoin mining and hosting, advanced managed services, energy arbitrage, traditional data centers, and emerging technologies like AI and machine learning.

With an extensive infrastructure portfolio encompassing eleven sites, including high-performance computing data centers and Bitcoin mining facilities across various locations, Hut 8 Corp. distinguishes itself with a unique treasury strategy, holding one of the most substantial inventories of self-mined Bitcoin among publicly-traded companies worldwide.

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