Applied Digital Corporation has entered into a $5.0 billion perpetual preferred equity financing facility with investment vehicles of funds managed by Macquarie Asset Management (MAM) for its High-Performance Computing (HPC) business. This agreement positions Applied Digital for significant growth in the industry, aiming to establish it as a leading HPC data center owner, operator, and developer in the United States.
Under the terms, MAM will invest up to $900 million to support the full 400 MW build-out of the Ellendale HPC Campus. Additionally, MAM has a right of first refusal on all future HPC data center project funding, up to an additional $4.1 billion, for 30 months following the close of the initial transaction.
The investment proceeds from MAM, combined with future project financing, are intended to fund the Ellendale buildout, repay approximately $180 million in existing bridge debt, and allow Applied Digital to recover an estimated $300 million of its equity investment in the Ellendale HPC Campus. Applied Digital will retain an 85% ownership stake in both existing and future HPC assets, minimizing dilution to its public stockholders.
The preferred equity will accrue a dividend at a rate of 12.75% per annum, payable in kind or cash, and carries a minimum 1.80x multiple of invested capital liquidation preference. The closing of the facility is conditioned upon Applied Digital's HPC subsidiary executing a lease with a hyperscaler for its 100 MW Ellendale HPC data center that is acceptable to MAM, along with other customary closing conditions. At closing, MAM will fund $225 million, with additional amounts drawable upon the execution of further acceptable leases.
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