Applied Digital Corporation, a designer, builder, and operator of next-generation digital infrastructure designed for High-Performance Computing (“HPC”) applications, announced that the Company recently entered into a private financing agreement with a single investor, in which it issued a $42,131,579 unsecured convertible debenture. The convertible debenture bears no interest, has an original issue discount of five percent and has a term of 54 weeks. The conversion price for the note is the lower (a) $8.00 and (b) 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.
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 by the Investor, which is roughly five percent of the previous thirty days value traded or less than two days of liquidity. Subject to the Investor’s right to convert, the Company may prepay the note at any time that the Company’s common stock trades below $8.00 or the thirtieth trading day after the registration statement registering the resale of the note’s underlying shares becomes effective. The Investor has contractually agreed not to short the stock during the term of the note.
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“The net proceeds from the private financing will be strategically utilized to finance substantial advancements in the construction phase of our HPC data center in Ellendale, North Dakota. This underscores our commitment to project advancement and timely fulfillment of our contractual obligations. We are also actively negotiating our project-level financing to ensure the project’s timely completion,” explained Applied Digital CFO David Rench.
Lowenstein Sandler LLP acted as legal counsel to the Company.
The securities described above (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, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Company 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.
Source: Applied Digital
