Nexo once offered BlockFi to buy him in a deal worth $850 million

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2022-11-22 02:17:43

Nexo offered rival BlockFi an $850 million deal in July when the second company was struggling financially and signed a non-final deal with FTX.US. The deal includes $30 million for a 51% acquisition of BlockFi and a $500 million line of credit.

Cryptocurrency lender Nexo earlier this year made an unsuccessful offer to acquire struggling rival BlockFi as part of a proposed deal worth around $850 million.

Nexo once asked for a “rescue” of $ 850 million

The reason for the “offer”

The offer came in July as BlockFi was struggling financially after losing $80 million on exposure to now-bankrupt crypto hedge fund Three Arrows Capital. BlockFi turned down Nexo’s offer and opted to stick with a zero-sum deal with FTX.US, which filed for bankruptcy protection last week along with sister trading company Alameda Research.

“I can confirm that we offered BlockFi a deal over the summer,” Nexo co-founder Antoni Trenchev told The Block. “It was a better alternative to the FTX proposal, but BlockFi’s management chose to agree with FTX. Since it made no economic sense for them to make a worse deal, we didn’t make any economic sense. confusion and speculation about conflicts of interest.”

Mr. Trenchev went on to say that if BlockFi had accepted Nexo’s offer, it might not have been in its current state. While BlockFi co-founder and CEO Flori Marquez hinted that the company was fine after FTX first faced a liquidity crunch, the consequences spread quickly. BlockFi halted withdrawals last week, and the Wall Street Journal reported on Wednesday that it is preparing to file for Chapter 11 bankruptcy protection.

“We knew at the time that Alameda was BlockFi’s biggest debtor, second only to Three Arrows Capital, which they had just liquidated at a loss,” Trenchev said. “Nexo believes that our proposal, which focuses on better risk management, reduced costs, new products and markets, can create a lot of value for all stakeholders — customers, shareholders, east and BlockFi as a company.”

Nexo .’s $850 Million Proposal

The Trenchev co-founder said Nexo offered BlockFi a deal worth a total of about $850 million. It includes $30 million to acquire 51% of BlockFi through a combination of cash and equity, $30 million to be paid to existing BlockFi shareholders upon successful registration of S1 profit product. BlockFi’s profitability with the U.S. Securities and Exchange Commission and a $500 million line of credit to address BlockFi’s Liquidity Needs, according to the investment proposal document.

The offer also includes Nexo having a 5-year call option on the remaining 49% of BlockFi’s equity at a valuation of 10x the proposed, and the termination of BlockFi’s pool of uninvested employee options. , “thus increasing the shares of existing shareholders,” according to the document. Trenchev said the offer to buy 49% of the shares is worth about $ 288 million, the total offer value is about 850 million.

The FTX.US offer for BlockFi is worth a total of $680 million. It includes a $400 million credit facility and an option to purchase BlockFi for up to $240 million.

Nexo is also open to partnering with others, including FTX.US, to make an offer for BlockFi, according to an email sent in July by Nexo’s head of finance and investment, Tatiana. Metodieva, to BlockFi executives including co-founders Marquez and Zac Prince.

“We would like to inform you of Nexo’s non-binding offer for the acquisition of BlockFi,” the email read. “We stand ready to explore the opportunity individually or in concert with other investors, including but not limited to FTX, should FTX decide to withdraw from the process for any reason.”

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