Hyperscale Data, a diversified holding company, entered into a securities purchase agreement providing for up to $25 million of financing from Ault (A&C), a related party. Pursuant to the agreement, Hyperscale Data has agreed to issue and sell to A&C up to $25 million in shares of series G convertible preferred stock. The preferred shares will be senior to all other classes of preferred stock the company has outstanding except with respect to the series C convertible preferred stock, with which it ranks in parity, as well as senior to the company’s class A common stock.
Each preferred share shall have a stated value of $1,000 per share and, upon stockholder approval, shall be convertible at the holder’s option into shares of common stock at a conversion price equal to the greater of $0.10 per share, which floor price shall not, except for voting rights purposes, be adjusted for stock dividends, stock splits, stock combinations and other similar transactions and the lesser of (A) $6.74, or (B) a 5% premium to the closing sale price of the common stock on the day immediately prior to the date of conversion.
The conversion price will be subject to standard anti-dilution provisions in connection with any stock split, stock dividend, subdivision or similar reclassification of the common stock. The preferred stock also has “full ratchet” price protection in the event the company should issue securities at a lower price than the conversion price. The preferred stock shall pay a dividend at an annual rate of 9.5%, which the company may, during the first two years, pay in shares of common stock.
Further, A&C will receive warrants to purchase up to approximately 4.25 million shares of common stock, presuming that the full amount of the preferred shares is sold, exercisable for five years at $5.92 per share, subject to adjustment.
The proceeds from the financing will be used for expansion of the MI data center to support infrastructure upgrades necessary to support the growing demands of high-performance computing services powering artificial intelligence solutions, repayment of outstanding indebtedness and general working capital purposes.
“The conversion price of the preferred shares is nearly a 25% premium over the current market price,” Milton “Todd” Ault III, executive chairman of Hyperscale Data and chairman and CEO of A&C, said. “That A&C is willing to invest an additional up to $25 million, beyond the $75 million in shares of a virtually identical series of preferred stock, the series C preferred stock of which it has already purchased approximately $50 million, on those terms should be a clear indicator of our belief that the market has been undervaluing the company, which I’ve been highlighting for years. This transaction is more than a number — it’s a declaration of my steadfast confidence in our data centers, the crane company, the lending firm and the exceptional portfolio companies we’ve nurtured over the past seven years. Each is a vital component of our collective success.”
The agreement provides for several closings through Dec. 31, 2025, though such dates may be extended by A&C as set forth in the agreement. The consummation of the transactions contemplated by the agreement, specifically the conversion of the preferred shares and the exercise of the warrants in an aggregate number in excess of 19.99% on the execution date of the agreement, are subject to various customary closing conditions as well as regulatory and stockholder approval. In addition to customary closing conditions, the closing of the financing is also conditioned upon the receipt by A&C of financing to consummate the transaction.
