Applied Digital Issues $42M Debenture for HPC Project

Applied Digital Corporation (NASDAQ: APLD) recently announced that it issued a $42,131,579 unsecured convertible debenture to advance its high-performance computing (HPC) data center project in Ellendale, North Dakota. The debenture bears no interest, has a term of 54 weeks, and has an original issue discount of five percent.

The conversion price for the note is the lower of $8.00 and 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. Additionally, if the stock trades below $8.00, the investor is limited to converting no more than $16.0 million per month in the aggregate across all convertible debentures held, which is roughly five percent of the previous thirty days value traded or less than two days of liquidity.

Applied Digital CFO David Rench stated that the net proceeds from the private financing will be used to finance substantial advancements in the construction phase of their HPC data center in Ellendale, North Dakota. This reflects the company's commitment to project advancement and timely fulfillment of contractual obligations.

Lowenstein Sandler LLP acted as legal counsel to the company in this financing agreement. It's worth noting that the securities described, including any securities issuable pursuant to the conversion provisions of the convertible debenture, have not been registered under the Securities Act of 1933, as amended.

Applied Digital has agreed to file a resale registration statement with the SEC for purposes of registering the resale of the shares of common stock issuable in connection with the offering.

In terms of financial performance, the company's stock traded below $8.00, triggering a provision that allows the company to prepay the note. This suggests that the company's stock price has declined since the issuance of the debenture.

Today the company's shares have moved 8.5% to a price of $4.61. For the full picture, make sure to review Applied Digital's 8-K report.

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