ALBANY, N.Y. - Soluna Holdings, Inc. (NASDAQ:SLNH), a developer of green data centers, has entered into a $25 million Standby Equity Purchase Agreement with Yorkville Advisors Global L.P. The initial draw of $10 million from this agreement will be directed towards repaying existing Convertible Notes and funding the development of data center projects.
The company plans to use this financing to enhance Soluna Cloud AI operations, improve equity cash flows, and strengthen its balance sheet. CEO John Belizaire stated that the capital and simplification of their capital structure will allow them to scale their business and advance AI data center designs.
Soluna aims to complete the build-out of a 2 MW AI data center, accelerate the 166 MW Project Kati, and acquire new sites for up to 20 MW of additional AI data center development. The Convertible Notes will be replaced with more flexible unsecured financing, which includes a one-year term and 0% interest, devoid of warrants or complex financial instruments.
The deal with Yorkville provides for two initial tranches, with the first $10 million advance netting $9.3 million for Soluna. This advance is subject to third-party consents, customary closing conditions, and shareholder approvals. Further access to the remaining $15 million is contingent upon repayment of the initial advance and meeting certain conditions.
Northland Capital Markets served as the sole placement agent for the transaction. The company's upcoming 8-K will provide more details about the financing.
The announcement contains forward-looking statements under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Soluna Holdings has stated that they undertake no duty to update the information provided, except as required by law.
This financial move is based on a press release statement and is intended to support Soluna's growth objectives in the renewable energy and computing sectors.
In other recent news, Soluna Holdings has secured $30 million for the expansion of its flagship data center, known as Project Dorothy 2. This funding, led by Spring Lane Capital, is set to increase the company's capacity for behind-the-meter operations. Soluna Cloud, the company's subsidiary, has raised its credit facility to $13.75 million, aiming to enhance customer experiences in the AI sector.
Additionally, Soluna Holdings has entered into a $34 million cloud services agreement with Hewlett Packard Enterprises (HPE), which is expected to generate up to $80 million in revenue over the next three years. This development was advised by BitOoda Technologies and Imperial Capital.
On the operational front, Soluna's various projects, including Project Dorothy, Project Sophie, and Project Kati, are making significant progress. The company has also appointed John Tunison as its new Chief Financial Officer. These developments are part of Soluna Holdings' ongoing efforts to expand its green data center and hosting services.
InvestingPro Insights
Soluna Holdings, Inc. (NASDAQ:SLNH) is making strategic financial moves to support its expansion in renewable energy and high-performance computing. With a market capitalization of $19.28 million, the company shows a significant commitment to growth, as evidenced by its recent Standby Equity Purchase Agreement with Yorkville Advisors Global L.P.
InvestingPro data highlights Soluna's impressive gross profit margin of 76.41% for the last twelve months as of Q2 2024, reflecting the company's ability to manage its cost of sales effectively. This is particularly relevant as Soluna plans to scale its business and advance AI data center designs, where cost efficiency can be a critical factor for success.
However, it's important to note that Soluna is navigating through financial complexities, as indicated by its negative P/E Ratio of -0.24 and an adjusted P/E Ratio of -0.96 for the same period. Additionally, the company's stock has experienced significant price volatility, with a 1-week price total return of -15.4% and a 1-month price total return of -20.43%, yet it has managed a strong return over the last three months with a 21.38% increase.
InvestingPro Tips for Soluna Holdings suggest that while the company has been quickly burning through cash, which is a concern for liquidity, it also does not pay a dividend to shareholders, allowing it to reinvest earnings back into the company. With 11 additional tips listed on InvestingPro for Soluna Holdings, investors can gain a more comprehensive understanding of the company's financial health and potential investment risks or opportunities.
For investors looking for more in-depth analysis and additional tips on Soluna Holdings, they can explore the comprehensive insights available on InvestingPro at https://www.investing.com/pro/SLNH.
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