The special purpose acquisition company that agreed to take a Cincinnati startup public in a multibillion-dollar deal is again asking shareholders to extend its deadline to finalize the agreement, an ask that comes as the local company faces default claims from its main lender and a lawsuit stemming from its operating site in Tennessee.
New York-based Adit EdTech, the SPAC that wants to take Cincinnati-based bitcoin self-mining startup Griid Infrastructure public in a $3.3 billion merger first announced in November 2021, will hold a special meeting Dec. 14 where stockholders will vote on a second extended deadline to complete the merger.
Without it, Adit EdTech and Griid have until Jan. 14, 2023, to complete the deal, per a charter agreement.
Adit EdTech is requesting a maximum of six one-month extensions. Previously, Adit EdTech and Griid in August extended their deadline to finalize the deal until Oct. 1, a date that has since passed.
If not approved, or if the Jan. 14 date is not met, Adit EdTech will “cease all operations,” per a U.S. Securities and Exchange Commission filing.
What challenges does Griid's $3.3 billion deal face?
The extension request is the latest in a wave of hurdles Griid has faced since the SPAC deal became public last year. Griid, founded quietly in 2018 by CEO Trey Kelly, procures cheap, carbon-free energy to manage, build and operate U.S.-based bitcoin mining facilities.
Griid’s lender has waged claims the company has defaulted on its main line of credit, and there’s an outstanding lawsuit centered around one of Griid’s bitcoin mining sites in Tennessee.
Blockchain.com, a cryptocurrency financial company, in June claimed Griid had defaulted on its line of credit, which would cancel Blockchain’s commitments and accelerate Griid’s repayment obligation. In November 2021, Griid announced a $525 million, four-year credit facility, or type of loan, from Blockchain.com to bring on additional mining capacity.
In a letter dated June 12, Griid rejected those assertions (neither Adit EdTech nor Griid have responded to Cincy Inno's previous requests for comment).
In the most recent SEC filing, on Oct. 9, Adit EdTech said Griid and Blockchain agreed on a new “restructured senior secured term loan” for $57.4 million, although Blockchain does not have any commitment to extend additional credit to Griid.
Since the merger was announced last year, the bitcoin market price has also dropped significantly, “shrinking margins” for bitcoin mining enterprises, the filing said.
A number of planned deals between crypto companies and special purpose acquisition companies have been delayed or canceled as a result of the market rout.
In East Tennessee, Griid has an open lawsuit in Washington County, which names Griid subsidiary, Red Dog Technologies, and BrightRidge, a local utility that leases land to Griid, as defendants.
Washington County officials claim Griid’s mine in rural Limestone violates the county’s zoning resolution. The mine, which uses high-powered computer equipment, has prompted noise complaints from neighbors, per local news reports.
In a proposed settlement agreement, Griid has agreed to purchase 5 acres at Washington County’s industrial park, at a price of $35,000 per acre, to build a new – and quieter – mine, with plans to depart Limestone no later than the end of 2024.
The agreement also stipulates Griid pay Washington County $500 day, retroactive to September 2021, when the county first ordered BrightRidge to shut down the mine, up until its closure. That would put Griid's tab at roughly $207,500 to date.
The settlement has not been approved, and the Limestone site continues to operate.
