Applied Digital, a designer, builder and operator of next-generation digital infrastructure designed for high-performance computing (HPC) applications, has secured private financing from CIM Group, an investment firm and alternative asset manager with extensive experience in top-tier datacenter finance and development.
APLD Holdings 2, a subsidiary of the company, has issued a promissory note for commitments that total $125 million at close. Of the initial commitments, $15 million will be drawn on the date hereof, and the remaining will be drawn subject to the satisfaction of certain conditions outlined in the note.
In addition to the initial commitments, the note includes an accordion feature that allows for up to an additional $75 million of borrowings, subject to the mutual agreement of the borrower and lender. Principal amounts repaid under the note will not be available for reborrowing. In total, this financing provides the company with up to $200 million to be used solely towards the buildout of its HPC Campus in Ellendale, ND.
“We believe this financing with CIM Group represents a transformative step in the company’s journey to secure both project financing and a long-term lease with a hyperscaler at our HPC Campus in Ellendale, ND. With this financing, we believe we are able to keep our buildout plan on track and hope to finalize optimal terms for project financing concurrently with or shortly after the signing of a long-term lease,” Wes Cummins, CEO of Applied Digital, said. “We now believe we have line of sight to finalize the build-out of our Ellendale Campus, positioning Applied Digital as a leader in the datacenter infrastructure sector. We distinguish ourselves not merely by owning clusters of GPUs, but also by designing and operating large-scale, top-tier datacenters for world-class customers driving the AI revolution. We believe our Ellendale Campus will be a leading HPC datacenter, representing a significant advancement in the industry.”
“CIM Group is excited to support Applied Digital’s growth in cloud and hosting services for some of the world’s top companies,” Avi Shemesh, co-founder and principal of CIM Group, said. “CIM will continue to invest in digital infrastructure, providing solutions to companies building the AI ecosystem.”
The note will have a three-year term and bear interest at an initial rate of 12.0% per annum, payable quarterly in arrears. The company may prepay the note in full at any time, subject to certain defined prepayment penalties, which increase if the note remains outstanding for longer than six months. In connection with the financing, the lender will receive warrants for 6,300,449 shares of common stock of the company with a strike price of $4.8005 per share (a premium of 10% to the 10-day VWAP). The lender will receive a warrant to purchase up to an additional 2,964,917 shares of common stock of the company at the same strike price, subject to the company meeting certain conditions. This second tranche of warrants will be issued only after the borrowing of the full $125 million is made available and will be issued in a private placement.
Simpson Thacher & Bartlett acted as legal counsel to lender. Milbank and Lowenstein Sandler acted as legal counsel to the company.