Applied Digital Corp. 8-K

What Happened

• Applied Digital Corporation (through subsidiary APLD ComputeCo 3 LLC) announced on June 16, 2026 that it completed a private offering of 7.000% Senior Secured Notes due 2031, raising $1.59 billion. The notes were sold under a June 9, 2026 purchase agreement to qualified institutional buyers (Rule 144A) and non-U.S. persons (Reg S), with Goldman Sachs & Co. LLC acting as representative of the initial purchasers. Wilmington Trust, N.A. is trustee and collateral agent under the indenture.

Key Details

• Offering size: $1.59 billion aggregate principal, issued at 100.000% of par.
• Interest and maturity: 7.000% annual interest, paid semi‑annually (June 15 / Dec 15), first payment Dec 15, 2026; maturity June 15, 2031.
• Amortization & redemption: Principal amortizes semi‑annually beginning after final lease commencement dates; issuer may redeem notes (full/partial) after June 15, 2028 at indenture prices; prior to that date redemptions subject to 100% principal + make‑whole (with a limited 40% equity‑proceeds exception).
• Use of proceeds: fund construction of 150 MW critical IT load (ELN‑04) at Polaris Forge 1 (Ellendale, ND AI Factory), repay Goldman Sachs Bank USA bridge loan, fund debt service reserves, and pay transaction costs.
• Credit protections: notes are senior secured obligations; indenture includes customary covenants limiting additional debt, dividends/repayments, liens, certain asset sales, affiliate transactions and mergers; change‑of‑control repurchase at 101% of principal.
• Parent guarantee and completion guarantee: Applied Digital provided customary completion guarantees to fund construction shortfalls for the Projects if note proceeds and available funds are insufficient.

Why It Matters

• This transaction materially increases Applied Digital’s secured debt (creation of a direct financial obligation) while providing dedicated financing to expand its Ellendale AI datacenter capacity and refinancing a bridge loan. For investors, key implications include higher leverage on consolidated projects, scheduled amortization and fixed 7.00% coupon exposure, and security interests and covenants that affect the issuer’s flexibility. The use of proceeds toward growth (ELN‑04) may support future revenue from datacenter leases, but the company now has near‑term principal amortization and a maturity in 2031 to monitor.