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Applied Digital Secures Private Debt Facility Up to $200

  • Applied Digital has secured an initial commitment of $125 million to fund ongoing construction costs associated with the HPC Campus in Ellendale, ND, which may be increased to $200 million by mutual agreement
  • This financing completes the company’s near-term capital needs and positions the company to secure project-level financing to finance the remaining costs to complete the first HPC building.
  • Funding provides the company with a clear path to solidify its position as a leading owner and operator of HPC data centers

DALLAS, June 7, 2024 (GLOBE NEWSWIRE) — Applied Digital Corporation (Nasdaq: APLD) (“Applied Digital” or the “Company”), a designer, builder and operator of next-generation digital infrastructure designed for high performance computing (“ HPC”) applications, today announced that the company has secured private financing from CIM Group, a leading investment firm and alternative asset manager with extensive experience in the financing and development of top-tier data centers. APLD Holdings 2, LLC, a subsidiary of the Company (the “Borrower”), has issued a promissory note (the “Note”) for commitments totaling $125 million at closing (“Initial Commitments”). Of the initial commitments, $15 million will be recognized as of the date hereof, and the remainder will be recognized subject to the satisfaction of certain conditions set forth in the note. In addition to the Initial Commitments, the Note includes an accordion feature that allows for up to $75 million in borrowings, subject to the mutual agreement of the Borrower and the lender. The principal amounts repaid under the Note cannot be borrowed again. In total, this financing will provide the company with up to $200 million to be used solely for the construction of the 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 can keep our construction plan on track and hope to finalize optimal project financing terms concurrently with or shortly after signing a long-term lease,” said Wes Cummins, CEO of Applied Digital. “We now believe we are in sight of completing the build-out of our Ellendale Campus, positioning Applied Digital as a leader in the data center infrastructure sector. We differentiate ourselves not only by owning clusters of GPUs, but also by designing and operating top-tier, large-scale data centers for world-class customers that are driving the AI ​​revolution. We believe our Ellendale Campus will be a leading HPC data center, which will represent significant advancements in the industry.”

“CIM Group is excited to support Applied Digital’s growth in cloud and hosting services for some of the world’s best companies,” said Avi Shemesh, co-founder and director of CIM Group. “CIM will continue to invest in digital infrastructure and provide solutions to companies building the AI ​​ecosystem.”

The Note has a term of three years and is interest-bearing at an initial interest rate of 12.0% per annum, payable quarterly in arrears. The Company may redeem the Notes in full early at any time, subject to certain prepayment penalties, which increase if the Notes are outstanding for more than six months. In connection with the financing, the lender will receive warrants for 6,300,449 shares of the Company’s common stock with an exercise price of $4.8005 per share (a 10% premium over the 10-day VWAP). The lender will receive a warrant to purchase an additional 2,964,917 common shares of the Company at the same exercise price, provided the Company meets certain conditions. This second tranche of warrants will only be issued after the entire $125 million loan has been made available and will be issued through a private placement.

Amid the growing AI revolution, management believes that Applied Digital is uniquely positioned to provide advanced solutions in data centers and Cloud as a Service. Our purpose-built data centers are strategically designed to maximize efficiency for HPC needs. Applied Digital Cloud delivers cost-effective custom GPU computing solutions for AI, ML, rendering and other HPC workloads. We believe Applied Digital’s state-of-the-art infrastructure delivers high performance at low cost, helping customers thrive in this era of exponential technological advancement. With a commitment to innovation and exceptional customer support, we want to help companies harness the transformative power of AI.

Simpson Thacher & Bartlett LLP acted as legal counsel to the lender. Milbank LLP and Lowenstein Sandler LLP acted as legal counsel to the company.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Applied Digital
Applied Digital (Nasdaq: APLD) designs, develops and operates next-generation data centers in North America to provide digital infrastructure solutions to the rapidly growing high-performance computing (HPC) industry. More information can be found at www.applieddigital.com. Follow us on X (formerly Twitter) at @APLDdigital.

Forward-Looking Statements
This press release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 with respect to, among other things, future operating and financial performance, product development, market position, business strategy and objectives and the completion of the transaction described herein. . These statements use words and variations of words, such as ‘continue’, ‘build’, ‘future’, ‘enlarge’, ‘drive’, ‘believe’, ‘look’, ‘forward’, ‘confident’, ‘deliver’ , ‘outlook’, ‘expect’, ‘plan’, ‘hope’, ‘project’ and ‘predict’. Other examples of forward-looking statements may include, but are not limited to: (i) statements regarding business plans and objectives, including progress in our construction phase of the HPC data center in Ellendale, North Dakota, our evolving business model and a shift in our business strategy regarding our HPC data centers, or estimates or forecasts of actions by suppliers, (ii) statements about future economic performance, and (iii) statements of assumptions underlying other statements and representations about the company or its operations. You are cautioned not to rely on these forward-looking statements. These statements are based on current expectations of future events and are therefore inherently subject to uncertainty. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results may differ materially from the Company’s expectations and projections. These risks, uncertainties and other factors include: decreases in demand for our products and services; the volatility of the crypto asset industry; the inability to comply with regulatory developments and changes; cash flow and access to capital; and maintaining relationships with third parties. The information contained in this press release is current as of the dates and time periods indicated herein, and the Company makes no commitment to update the information contained in these materials except as required by law.

Investor relations liaison
Matt Glover or Alex Kovtun
Gateway Group, Inc.
(949) 574-3860
[email protected]

Media contact
Brenlyn Motlagh or Diana Jarrah
Gateway Group, Inc.
(949) 899-3135
[email protected]

About CIM Group
CIM is a leading investment firm and alternative asset manager. Since 1994, CIM has sought to create value in projects and positively impact the lives of people in communities across America by delivering more than $60 billion in critical real estate and infrastructure projects. CIM’s diverse team of experts applies its broad knowledge and disciplined approach through hands-on real asset management to deliver excellence to our customers, stakeholders and the communities we serve. For more information, visit www.cimgroup.com.

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