Applied Digital Corporation (APLD) saw its stock decline by 4.75% on December 2, 2024, closing at $9.62 after opening at $10.19. The stock experienced a volatile trading session, reaching a high of $10.54 before dropping to a low of $9.61. The decline in share price was primarily driven by investor concerns surrounding the company's recent $150 million senior secured debt financing deal with Macquarie Equipment Capital, Inc. While the refinancing aims to lower capital costs and enhance flexibility for the Ellendale HPC data center project, it also raised concerns about the elimination of parent guarantees and cross-collateralization, which might affect investor confidence regarding the security of their interests.
The refinancing deal, announced on December 2, 2024, features a low interest rate of 0.25% per annum and is intended to replace the existing credit facility with CIM Group. Despite the potential benefits of reduced capital costs and increased financial flexibility, the market reacted negatively, possibly due to the perceived financial strain indicated by the need for refinancing and the elimination of guarantees. The trading volume was 15,288,758, which is 88.04% of the average, suggesting significant investor activity in response to the news.