DALLAS - Applied Digital Corporation (NASDAQ: APLD), a company specializing in high-performance computing (HPC) data center solutions with a current market capitalization of $1.6 billion, has announced a major financial agreement with Macquarie Asset Management (MAM). The agreement involves a $5.0 billion investment facility to fund Applied Digital's HPC data center development, including the Ellendale HPC Campus. According to InvestingPro data, the company has demonstrated impressive revenue growth of 124% over the last twelve months, though it currently maintains a weak financial health score.
Under the terms of the deal, MAM will invest up to $900 million in the Ellendale campus, with the option to contribute an additional $4.1 billion across Applied Digital's future HPC data center projects. This investment will help Applied Digital repay project-level debt, estimated at $300 million, and further finance its expansion plans. The company's current debt-to-equity ratio stands at 1.76, and analysts maintain a strong buy consensus with a potential upside of 48% from current levels.
Applied Digital's CEO, Wes Cummins (NYSE:CMI), expressed confidence that the partnership with MAM will accelerate the company's growth in the HPC data center sector. The investment will provide Applied Digital with a substantial equity portion required to construct over 2.0 GW of HPC data center capacity.
MAM's investment will take the form of perpetual preferred equity and a 15% common equity interest in Applied Digital's HPC business segment. This strategic financial structure allows Applied Digital to maintain an 85% ownership stake in both existing and future HPC assets, minimizing stockholder dilution.
The preferred equity will accrue a 12.75% annual dividend, which may be paid in kind or cash, and carries a minimum 1.80x multiple of invested capital liquidation preference, inclusive of the common equity value. The closing of the facility is contingent upon several conditions, including the execution of a lease with a hyperscaler for Applied Digital's 100 MW Ellendale HPC data center.
Anton Moldan, Senior Managing Director of MAM, highlighted the compelling opportunity presented by Applied Digital's significant progress at the Ellendale HPC campus and its appeal to potential hyperscale customers.
The agreement is seen as a transformative step for Applied Digital, positioning it as a leader in Tier 3 data center infrastructure and a provider of advanced AI workload solutions. The company aims to leverage its proprietary design and state-of-the-art data centers to meet the growing demand for AI innovation. InvestingPro subscribers can access 15 additional key insights about Applied Digital's financial health, valuation metrics, and growth prospects through the comprehensive Pro Research Report, which provides essential intelligence for informed investment decisions.
This news is based on a press release statement and has not been independently verified by the Wall Street Journal. The securities mentioned have not been registered under the Securities Act of 1933 and are subject to market conditions and other factors.
In other recent news, Applied Digital has made significant strides in its operations. Macquarie's asset-management arm has committed a substantial investment of up to $900 million into Applied Digital's North Dakota data center campus. This move could potentially bolster the company's growth trajectory, providing a significant financial cushion as it scales up operations.
On the personnel front, Laura Laltrello has been appointed as the new Chief Operating Officer, bringing her expertise in data center operations and large-scale infrastructure projects to the company. This strategic appointment is expected to align Applied Digital's operational efforts with its long-term objectives.
In the realm of analyst coverage, Cantor Fitzgerald initiated coverage on Applied Digital, expressing confidence in the company's potential and assigning an Overweight rating. The firm's analysis suggests that a deal with a major client, referred to as "Hyperscaler 1," is not a matter of if but when.
Other recent developments include the energizing of a key data center transformer and the initiation of an offering of Series E-1 Redeemable Preferred Stock aiming to raise up to $62.5 million. These moves underscore Applied Digital's commitment to growth and innovation.
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