SCHEDULE: Two Seas Capital Opposes Core Scientific Merger

Two Seas Capital, holding 6.3% of Core Scientific, announces intent to vote against the proposed merger with CoreWeave, citing unfavorable terms.

Summary

• Two Seas Capital LP, Two Seas Capital GP LLC, and Sina Toussi (collectively, the "Reporting Persons") have filed a Schedule 13D regarding their beneficial ownership in Core Scientific, Inc. (CSWI).
• The Reporting Persons collectively beneficially own 19,122,842 shares of Core Scientific Common Stock, representing approximately 6.3% of the outstanding shares.
• This ownership includes 313,646 shares issuable upon exercise of warrants and 5,722,300 shares issuable upon exercise of options.
• The aggregate purchase price for these securities across Two Seas Strategic Investment Fund LP, Two Seas Global (Master) Fund LP, and two managed accounts was approximately $133,916,475.85.
• The primary purpose of this filing is to disclose the Reporting Persons' intent to vote against the Agreement and Plan of Merger between Core Scientific and CoreWeave, Inc., which was entered into on July 7, 2025.
• Two Seas Capital issued a press release and open letter to Core Scientific shareholders on August 7, 2025, detailing their reasons for opposing the merger.
• The Reporting Persons intend to solicit proxies against the adoption of the Merger Agreement at the upcoming special meeting of stockholders and plan to file a proxy statement.
• They may engage in discussions with Core Scientific management, other stockholders, and interested parties regarding the merger, business strategy, corporate governance, and other related matters.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. While the opposition to the merger introduces uncertainty, it stems from the Reporting Persons' belief that Core Scientific is undervalued by the current deal. This activist stance could lead to a better outcome for shareholders, either through a revised offer or a stronger standalone strategy, indicating a positive outlook on the company's intrinsic value.

Positives

• The Reporting Persons acquired their stake because they believed Core Scientific represented an attractive investment opportunity, indicating a belief in the company's underlying value.
• Their opposition to the merger suggests they believe the company is undervalued by the proposed terms, potentially leading to a better outcome for shareholders if the merger is blocked or renegotiated.

Negatives

• The Reporting Persons intend to vote against the proposed merger with CoreWeave, indicating dissatisfaction with the current terms of the agreement.
• The opposition introduces uncertainty regarding the completion of the merger, which could impact Core Scientific's stock price and strategic direction.

Risks

• The ongoing proxy solicitation and potential failure of the merger could lead to prolonged uncertainty for Core Scientific's business and stock performance.
• If the merger is blocked, Core Scientific may need to pursue alternative strategic paths, which could carry their own set of risks and uncertainties.
• The expiration of significant call options on August 8, 2025, could impact the Reporting Persons' position and the market dynamics.

Future Outlook

The Reporting Persons intend to actively oppose the proposed merger with CoreWeave, including soliciting proxies against the Merger Agreement and filing a proxy statement. They plan to continuously review their investment, potentially adjusting their position through purchases or sales of securities, or engaging in hedging activities, based on market conditions, the Issuer's strategic direction, and the outcome of the merger vote.

Management Comments

• "The Reporting Persons acquired such securities because they believed that such securities, when purchased, represented an attractive investment opportunity."
• "TSC issued a press release containing an open letter to the Issuer's shareholders expressing its intent to vote against adoption of the Merger Agreement and the reasons therefor at the upcoming special meeting of stockholders."
• "The Reporting Persons intend to solicit proxies against the Issuer's proposal to adopt the Merger Agreement at the Special Meeting and also intend to file a proxy statement in connection with the Special Meeting, if and when it is scheduled."

Industry Context

This filing highlights a significant shareholder's opposition to a proposed merger in the digital asset mining and data center industry. Such activist stances can create uncertainty for deal completion but also signal potential for a higher valuation or alternative strategic paths for the target company, impacting industry M&A dynamics.

Comparison to Industry Standards

• NA

Corporate Governance

Stakeholder Impact

• Shareholders: Potential for increased value if the merger is blocked and a better offer or standalone strategy emerges, but also risk of uncertainty and potential share price volatility if the deal fails.
• Core Scientific Management/Board: Increased pressure to address shareholder concerns and potentially re-evaluate the merger terms or strategic direction.
• CoreWeave, Inc.: Uncertainty regarding the successful completion of the acquisition of Core Scientific.
• Employees: Potential impact on future employment and company culture depending on the merger's outcome or alternative strategic paths.

Next Steps

• The Reporting Persons intend to solicit proxies against the adoption of the Merger Agreement at the upcoming special meeting of stockholders.
• They plan to file a proxy statement in connection with the Special Meeting.
• They may engage in discussions with Core Scientific's officers, directors, other stockholders, and interested parties regarding the merger and other strategic matters.
• The Reporting Persons may increase or decrease their positions in Core Scientific securities or enter into hedging transactions based on ongoing review of their investment.

Key Dates

Recommendation

The filing indicates a significant shareholder's strong opposition to the proposed merger, believing the company is undervalued. This creates a 'wait and see' scenario for investors. While the outcome of the proxy fight is uncertain, the activist's stance suggests potential for a higher offer or a more favorable strategic direction for Core Scientific, making a 'hold' recommendation appropriate to observe developments.

Keywords

Core Scientific, CoreWeave, Two Seas Capital, Merger Agreement, Proxy Fight, Shareholder Activism, Common Stock, SEC Filing, Schedule 13D, Investment Management