Applied Digital Secures $1.59 Billion to Expand AI Capabilities
1. Introduction
In a significant move to bolster its infrastructure, Applied Digital Corporation (NASDAQ: APLD) announced today the pricing of $1.59 billion in senior secured notes. This financing effort aims to fund the construction of a new building at their Polaris Forge 1 campus, further establishing their commitment to supporting high-performance data centers for AI, networking, and blockchain workloads.
2. Details of the Offering
The offering, priced at par, entails the issuance of 7.000% senior secured notes due in 2031 by APLD ComputeCo 3 LLC, a subsidiary of Applied Digital. The notes will be sold through a private offering, primarily targeting qualified institutional buyers in the United States and non-U.S. persons outside the country, utilizing Rule 144A and Regulation S exemptions under the Securities Act of 1933. The expected closing date for this transaction is around June 16, 2026, contingent upon market conditions.
Purpose of the Proceeds
The net proceeds from this offering will be allocated for several critical purposes:
- Construction of ELN-04: The majority of the funds will support the construction of 150 megawatts of critical IT load at the fourth building, designated as ELN-04, at the Polaris Forge 1 campus in Ellendale, North Dakota.
- Debt Repayment: A portion of the funds will be used to repay the outstanding principal and accrued interest on a bridge loan facility provided by Goldman Sachs Bank USA.
- Debt Service Reserves: Additional funds will contribute to maintaining debt service reserves, ensuring financial stability.
- Transaction Expenses: Finally, the proceeds will also cover any associated transaction expenses related to the offering.
3. Guarantees and Security
The notes will be backed by full and unconditional guarantees from APLD ComputeCo 3's current and future subsidiaries, which include APLD ELN-04 HoldCo LLC, APLD ELN-04 LLC, and APLD ELN-04 LandCo LLC. The security for the notes will include first-priority liens on substantially all assets of APLD ComputeCo 3 and its subsidiaries, ensuring a robust collateral structure for investors.
Completion Guarantee
To further cement its commitment to the ELN-04 project, Applied Digital will provide a customary completion guarantee, which stipulates that they will ensure necessary funding to complete the project on time.
4. Regulatory Considerations
It is important to note that the notes have not been registered under the Securities Act or other securities laws, which limits their offering and sale in certain jurisdictions. The notes will only be available to qualified institutional buyers in the U.S. and non-U.S. persons under the aforementioned exemptions.
5. Company Overview
Applied Digital has rapidly established itself as a leader in the data center industry, recently being recognized as the Best Data Center in the Americas for 2025 by Datacloud. Founded in 2021 and headquartered in Dallas, Texas, the company excels in designing, building, and operating high-performance, sustainably-engineered data centers. Their innovative approach includes proprietary waterless cooling technology and rapid deployment capabilities, aimed at delivering secure and scalable computational resources while fostering economic opportunities in underserved communities through the Polaris Forge AI Factory model.
6. Conclusion
As Applied Digital embarks on this significant financing initiative, it underscores the company's strategic vision of expanding its infrastructure to meet the growing demands of AI and blockchain technologies. With the construction of the new building at Polaris Forge 1, Applied Digital is poised to enhance its operational capabilities and strengthen its position in the competitive data center landscape.
