ALBANY, N.Y. - Soluna Holdings, Inc. (NASDAQ:SLNH), a developer of green data centers for high-demand computing tasks like Bitcoin mining and AI, has reached pivotal agreements with its convertible noteholders and Series B Preferred Stock holder. These agreements are crucial steps toward unlocking a $25 million Standby Equity Purchase Agreement (SEPA) with a fund managed by Yorkville Advisors Global L.P.
The company has arranged for the noteholders to consent to the SEPA and the prepayment of the remaining convertible notes, waiving their rights to participate in the SEPA. Soluna will pay a $750,000 waiver fee and a 20% note prepayment premium, and will also purchase certain Soluna Cloud notes at a discount.
Additionally, the holder of Series B Preferred Stock has agreed to consent to the SEPA and waive participation rights. In exchange, Soluna will adjust the current conversion price, reprice existing warrants, and issue new warrants to the holder.
To access the SEPA funds, Soluna must file an S-1 registration statement with the Securities and Exchange Commission, which needs to be declared effective before funding can commence. This step remains the only significant hurdle after Yorkville and Soluna decided against prepaid advances, opting to work within the confines of the SEPA.
The financing is earmarked for several key initiatives, including retiring existing Convertible Notes to reduce leverage and dilution overhang, funding Soluna Cloud AI operations, and developing new data centers. It will also help improve equity cash flows, strengthen the company's balance sheet, and support the expansion of Project Grace, a 2 MW AI data center, and the development of the 166 MW Project Kati and 187 MW Project Rosa. Furthermore, Soluna aims to acquire new sites for up to 20 MW of additional AI data centers for its Colocation business.
Soluna's forward-looking statements in this announcement are protected under the U.S. Private Securities Litigation Reform Act of 1995, indicating that the company anticipates these developments to advance its mission of leveraging renewable energy for high-performance computing.
The information in this article is based on a press release statement from Soluna Holdings, Inc.
In other recent news, Soluna Holdings has reported a substantial 362% increase in revenue in Q2 2024. The company has also secured significant funding, including a $25 million Standby Equity Purchase Agreement with Yorkville Advisors Global L.P., and $30 million for the expansion of its flagship data center, Project Dorothy 2. Furthermore, Soluna Holdings has increased its credit facility to $13.75 million for its subsidiary, Soluna Cloud, and a $34 million cloud services agreement with Hewlett Packard Enterprises is expected to generate up to $80 million in revenue over the next three years.
In addition to financial developments, Soluna Holdings has announced Project Rosa, a green data center project offering up to 187 megawatts of capacity, powered by an adjacent 240 MW wind farm in Texas. The company has also decided not to proceed with prepaid equity advances under a previously executed Standby Equity Purchase Agreement (SEPA) with YA II PN, LTD, instead opting to adhere to the SEPA's original terms.
These recent developments, advised by Northland Capital Markets, BitOoda Technologies, and Imperial Capital, are part of Soluna Holdings' ongoing efforts to expand its green data center and hosting services. The company's various projects, including Project Dorothy 2, Project Sophie, and Project Kati, are making significant progress. Furthermore, Soluna Holdings has appointed John Tunison as its new Chief Financial Officer.
InvestingPro Insights
Soluna Holdings' recent agreements and financing plans come at a critical time for the company, as revealed by InvestingPro data. The company's market cap stands at a modest $17.73 million, reflecting its current position in the market. Despite facing financial challenges, Soluna has shown impressive revenue growth, with a 142.85% increase in the last twelve months as of Q2 2024, and an even more striking 367.84% quarterly growth in Q2 2024.
These growth figures align with the company's ambitious plans for expansion and development of new data centers. However, InvestingPro Tips highlight that Soluna is "quickly burning through cash" and "not profitable over the last twelve months," underscoring the importance of the recent $25 million SEPA agreement.
The company's gross profit margin of 76.41% is noteworthy, with an InvestingPro Tip pointing out "impressive gross profit margins." This strength could be crucial as Soluna aims to leverage its new funding for various initiatives, including retiring existing Convertible Notes and expanding its AI data center operations.
It's worth noting that Soluna's stock has faced recent challenges, with InvestingPro data showing a -42.75% price return over the last three months. An InvestingPro Tip also mentions that the "stock has taken a big hit over the last week," which may explain the urgency behind securing these new financial arrangements.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Soluna Holdings, providing deeper insights into the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.