Applied Digital Corporation (NASDAQ: APLD) has announced an agreement with Macquarie Asset Management for a funding of up to $5.0 billion to drive growth in its high-performance computing (HPC) business segment. The investment will support over 2 GW of HPC data center development.
Under the terms of the agreement, Macquarie Asset Management (MAM) will invest up to $900 million in the company’s Ellendale HPC data center campus, with an additional right to invest up to $4.1 billion across Applied Digital’s future HPC data center pipeline.
The investment from MAM, along with future project financing, will be used to repay project-level debt and allow the company to recover over an estimated $300 million of its equity investment in the Ellendale HPC campus.
As a result of this partnership, MAM will have a perpetual preferred and 15% common equity interest in Applied Digital’s HPC business segment, providing Applied Digital with an 85% ownership stake in both existing and future HPC assets.
The preferred equity will accrue a dividend at a rate of 12.75% per annum and carries a minimum 1.80x multiple of invested capital liquidation preference, inclusive of the value of the common equity. Furthermore, the common equity represents 15% of APLDH’s fully diluted common equity at issuance.
The closing of the facility is conditioned upon APLDH executing a lease with a hyperscaler for its 100 MW Ellendale HPC data center under construction acceptable to MAM, completion of the APLDH limited liability company operating agreement and other ancillary documents, as well as other customary closing conditions.
Wes Cummins, Chairman and CEO of Applied Digital, expressed confidence in the expanded relationship with MAM, positioning Applied Digital for significant growth in the industry and establishing it as one of the fastest-growing HPC data center owners, operators, and developers in the United States.
Anton Moldan, Senior Managing Director of Macquarie Asset Management, also expressed excitement about the partnership, highlighting Applied Digital’s differentiated strategy and unique access to a near-term power portfolio across North America in markets attractive for computing needs.
Furthermore, the press release emphasizes Applied Digital’s purpose-built data centers and cost-effective GPU cloud services designed to power AI, machine learning, graphics rendering, and other critical applications, enabling clients to excel in a rapidly evolving technological landscape.
The press release also noted the involvement of Northland Capital Markets as the sole placement agent to the company, as well as the involvement of Goldman Sachs & Co. LLC, Citizens JMP Securities, LLC, TD Securities, and Needham & Company as financial advisors and legal counsels to the company.
The securities described in the press release have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Following these announcements, the company's shares moved 16.2%, and are now trading at a price of $9.03. Check out the company's full 8-K submission here.
