According to Woofun AI, Bitcoin mining company Hut 8 (HUT.US) announced on September 28 the closing of a four-year, $1 billion senior secured credit facility, aimed at strengthening financial flexibility during the project development phase through a senior secured mechanism.

This credit arrangement allows the parent company to incur debt and issue letters of credit during the construction phase to pay for interconnection engineering deposits and supplier payments, thereby relieving cash collateral pressure.

Data compiled by Woofun AI shows that as of the agreement's effective date on September 24, there were no outstanding amounts, while the company's balance sheet as of June 30 showed cash reserves of $233.6 million.

This $1 billion letter of credit facility is part of an overall credit commitment, offering two ways to utilize bank credit: either drawing cash or providing guarantees for eligible debt, allowing the company to preserve long-term financing options in the early stages to address temporary funding needs.

In terms of the guarantee structure, Hut 8 Corp. serves as the borrower, with certain restricted subsidiaries providing guarantees, and priority claims covering most assets, with the exception of the $7.5 billion non-recourse project financing for the River Bend and Beacon Point AI data centers.

If SOFR loans are used, the initial interest rate is the benchmark rate plus 1.75 percentage points, fluctuating between 1.50 and 2.00 percentage points based on the debt-to-market-cap ratio, while the agreement restricts additional debt and guarantees.

Starting from the quarter containing March 31, 2027, minimum liquidity requirements take effect: 40% of the credit commitment must be met before the stabilization date, dropping to 25% thereafter, calculated according to the agreement's definitions and including equity compensation rights.

The ultimate debt scale at the parent company level will depend on the actual borrowed amount and the scale of letters of credit issued, marking an evolution of its capital structure from pure project financing toward a hybrid secured model.