Applied Digital Corporation (NASDAQ: APLD) has closed a $150 million senior secured debt financing with Macquarie Equipment Capital, Inc., a division of Macquarie Group’s commodities and global markets’ business. The financing, which was completed on November 27th, 2024, involves the issuance of a promissory note for the full $150 million in gross proceeds. This move effectively refinances the senior secured credit facility with the former senior lender, CIM Group, and removes encumbrances on assets outside of APLD Holdings 2, as well as the parent guarantee. The remaining net proceeds will be used to repay other outstanding debt and pay transaction expenses.
The 18-month note bears a low interest rate of 0.25% per annum and carries no commitment fee or original issue discount. It is subject to an initial minimum return hurdle of 1.11x within the first four months of the note’s term, which scales up to 1.35x over its term. As part of the financing, Macquarie will receive warrants for 1,035,197 shares of Applied Digital common stock with a strike price of $9.66 per share.
Wes Cummins, CEO of Applied Digital, stated that the financing improves the cost of capital for the Ellendale project and provides greater flexibility to support other growing areas of the company’s business. This new structure removes the parent guarantee and liens from non-HPC entities, reflecting the value created through previous financings and project execution.
The company’s purpose-built data centers and cost-effective GPU cloud solutions are optimized for AI, machine learning, graphics rendering, and other high-performance computing needs. Applied Digital aims to provide a hyper-efficient platform for the world’s most demanding HPC and AI workloads.
In connection with the financing, Lowenstein Sandler LLP acted as legal counsel to the company, while Northland Capital Markets acted as the sole placement agent, and Citizens JMP Securities, LLC acted as a financial advisor. Latham & Watkins LLP acted as legal counsel to Macquarie.
This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor may there be any sale of any securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. Following these announcements, the company's shares moved 1.8%, and are now trading at a price of $10.28. Check out the company's full 8-K submission here.
