Applied Digital Corporation (NASDAQ: APLD) recently announced the issuance of a $50 million unsecured convertible debenture to advance its HPC data center project in Ellendale, North Dakota. The convertible debenture, which has a term of 54 weeks, bears no interest and has an original issue discount of five percent.
The conversion price for the note is set at the lower of $6.00 or 95% of the lowest daily volume-weighted average price of the company’s common stock during the five trading days immediately prior to the date of conversion, subject to a floor price of $3.00. However, the investor has the option to use the $6.00 fixed conversion price. The investor is limited to converting no more than $9.0 million per month, with the ability to begin converting after May 1, 2024, unless there's an event of default and the conversion price is set at $6.00.
Applied Digital CFO David Rench stated that the company intends to use the net proceeds from the private financing, along with the proceeds from the sale of the Garden City facility, to finance significant advancements in the construction phase of the HPC data center in Ellendale, North Dakota. The company is also in negotiations for project-level financing to ensure timely project completion and fulfillment of contractual obligations.
Northland Capital Markets served as the advisor and sole placement agent for the company on the financing, while Lowenstein Sandler LLP acted as legal counsel to the company. It's worth noting that the securities described in the press release have not been registered under the Securities Act of 1933, as amended.
As of the latest available information, the stock of Applied Digital Corporation (NASDAQ: APLD) closed at $7.25 on March 31, 2024. Following these announcements, the company's shares moved -4.7%, and are now trading at a price of $4.08. Check out the company's full 8-K submission here.
