Argo Blockchain announces financial restructure, cancellation of shares

(Sharecast News) - Argo Blockchain announced a proposed financial restructuring to address its short- and medium-term capital needs on Monday, warning that failure to complete the plan would likely result in the company entering formal insolvency proceedings. The AIM-traded firm said the restructuring would involve a court-supervised process under Part 26A of the UK Companies Act.

It said it had entered into a support agreement with Growler Mining, which would provide a senior secured multi-draw term loan of up to $7.5m to fund operations during the restructuring process.

The loan would carry interest at SOFR plus 6%, with a minimum rate of 10%, alongside commitment and exit fees of 1.5% each.

Under the proposed plan, Growler could convert the loan into equity and would contribute crypto assets valued at between $25m and $30m into Argo's US subsidiary.

In exchange, Growler would ultimately receive at least 80% of the enlarged share capital of Argo, with bondholders - currently owed around $40m - receiving the remainder in full satisfaction of their claims.

Existing shareholders would see their shares cancelled, receiving only a nominal payment.

The plan would also include Growler providing further exit capital on completion to recapitalise the business and fund working capital needs.

All subsidiary operations and assets, including mining equipment and facilities, would remain under Argo's ownership throughout the process.

Argo said it intended to maintain its Nasdaq listing but expected its London Main Market listing would be cancelled following the restructuring.

The company said it had started court proceedings, with a target to present the plan by 29 August and complete it by the end of November, subject to court sanction and creditor approval.

It said the restructuring would also require a waiver from the UK Takeover Panel to avoid triggering a mandatory offer by Growler, given it would exceed 30% ownership.

"There can be no assurance that any definitive agreements for the restructuring plan will be signed or that the restructuring plan will be consummated," the company cautioned.

"Should Argo be unsuccessful in completing the restructuring plan, it is likely that Argo will need to enter into a formal insolvency process."

In a separate announcement, Argo said that chairman Matthew Shaw had stepped down with immediate effect.

Non-executive director Maria Perrella had been appointed chair.

"This transaction is the culmination of a months-long process designed to preserve Argo's operations and maximize value for Argo's stakeholders," commented chief executive Justin Nolan.

"The restructuring plan gives Argo a clear path forward with a significantly deleveraged balance sheet and a long-term strategic investor in Growler."

At 1052 BST, shares in Argo Blockchain were down 69.95% at 0.86p.

Reporting by Josh White for Sharecast.com.