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Applied Digital Corp. (NASDAQ:APLD) announced Thursday the completion of a private offering of $2.35 billion in aggregate principal amount of 9.250% senior secured notes due 2030. The notes were issued by APLD ComputeCo LLC, a subsidiary of Applied Digital, at a price equal to 97% of their principal amount. This debt offering is substantial relative to the company’s $6.59 billion market cap and existing $700.21 million debt load. According to InvestingPro data, APLD is currently trading above its Fair Value estimate, with analysts setting price targets ranging from $39 to $56.
According to a statement based on the company’s SEC filing, net proceeds from the offering will be used to fund part of the construction and related expenses for the company’s 100 megawatt and 150 megawatt data centers, known as ELN-02 and ELN-03, at its 400 megawatt Ellendale, North Dakota campus. Additional uses include repayment of the principal and accrued interest under a prior credit agreement, funding debt service reserves, and covering transaction expenses.
The notes, which are senior secured obligations of the issuer, bear interest at 9.250% per annum, payable semi-annually in arrears on June 15 and December 15, beginning June 15, 2026. The notes mature on December 15, 2030, with principal amortization starting December 15, 2027, and continuing semi-annually as outlined in the indenture.
The indenture governing the notes, entered into with Wilmington Trust, National Association as trustee and collateral agent, includes covenants that limit the issuer’s and subsidiary guarantors’ ability to incur additional debt, pay dividends, make certain investments, create liens, sell assets, and engage in transactions with affiliates, among other restrictions. If a change of control event occurs, the issuer is required to offer to repurchase the notes at 101% of the principal amount plus accrued interest.
Applied Digital will provide a completion guarantee for each data center project, committing to supply funds if proceeds from the notes and other available resources are insufficient to meet project commencement requirements.
The notes were sold to qualified institutional buyers under Rule 144A and to certain non-U.S. persons under Regulation S. This information is based on a press release statement included in the company’s filing with the Securities and Exchange Commission.
In other recent news, Applied Digital Corporation has announced significant developments related to its financial and operational strategies. The company’s subsidiary, APLD ComputeCo LLC, has priced a $2.35 billion offering of 9.250% senior secured notes due 2030. This move is expected to fund the construction of two data centers at its Ellendale, North Dakota campus. Additionally, Applied Digital is set to receive $787.5 million in equity funding from Macquarie Asset Management to further expand its AI data center campuses in North Dakota. This funding is part of a larger $5 billion perpetual preferred equity financing facility.
Shareholders of Applied Digital have approved an increase of 15,000,000 shares of common stock available under the company’s 2024 Omnibus Equity Incentive Plan. Furthermore, Babcock & Wilcox has secured a $1.5 billion project to provide one gigawatt of power for an Applied Digital AI facility. This project will involve the installation of four 300-megawatt natural gas-fired power plants. These developments underscore Applied Digital’s strategic focus on expanding its infrastructure and capabilities in the AI sector.
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