Applied Digital Announces $300 Million Convertible Notes Offering

Applied Digital Corporation (OTCMKTS:APLD) made significant announcements regarding its financial undertakings in a recent 8-K filing with the Securities and Exchange Commission.

The filing made on October 29, 2024, highlighted the company’s plans to offer $300 million in convertible senior notes due 2030 in a private offering. This offering is dependent on market conditions and related factors and is intended for qualified institutional buyers under Rule 144A of the Securities Act of 1933. Additionally, there is an option for initial purchasers to acquire up to an additional $45 million in convertible notes within a 13-day period from the issuance date.

Applied Digital also disclosed its intentions to repurchase shares of common stock up to one-third of the aggregate principal amount of the Convertible Notes. This repurchase plan will involve privately negotiated transactions and prepaid forward transactions with one of the initial purchasers or their affiliates.

In connection with the Convertible Notes Offering, the company obtained amendments to its Prepaid Advance Agreement dated March 27, 2024, with YA II PN, LTD. These amendments involve consents to the Convertible Notes Offering and associated share repurchase activities. Applied Digital plans to repay the remaining balance of approximately $6.9 million in cash before the promissory note’s stated maturity date.

While the offering details are specified in the Form 8-K filing, it’s important to note that this information does not constitute a solicitation of an offer to buy securities. The completion and terms of the offering are subject to market conditions and other variables.

The 8-K filing also includes the company’s plan to enter into capped call transactions to manage potential stock dilution upon conversion of the convertible notes. It outlined the strategy involving the prepaid forward stock purchase transaction to facilitate derivative transactions for investors in the Convertible Notes.

Applied Digital Corporation assured that neither the company nor the forward counterparty controls how investors use such derivative transactions. The announcement emphasized that various market activities following these transactions could impact the market price of the common stock and the Convertible Notes.

This filing has been made in compliance with the regulatory requirements outlined by the Securities Exchange Act of 1934. Investors and stakeholders are advised to review the full Form 8-K filing on the SEC’s website for comprehensive details regarding Applied Digital’s financial activities and future outlook.

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read Applied Digital’s 8K filing here.

About Applied Digital

Applied Digital Corporation designs, develops, and operates datacenters in North America. Its datacenters provide digital infrastructure solutions to the high-performance computing industry. The company also provides artificial intelligence cloud services, high performance computing datacenter hosting, and crypto datacenter hosting services.