Soluna Achieves Critical Milestones to Unlock $25M Growth Capital Line

Rhea-AI Summary

Soluna Holdings, Inc. (NASDAQ: SLNH) has announced critical milestones towards accessing a $25 million Standby Equity Purchase Agreement (SEPA) with Yorkville Advisors Global L.P. The company has reached agreements with its convertible noteholders and the holder of its Series B Preferred Stock, satisfying key conditions for the SEPA.

Key points include:

• Convertible noteholders will consent to the SEPA and waive participation rights in exchange for a $750,000 waiver fee and other considerations.
• The Series B Preferred stockholder will consent to the SEPA and agree to certain limitations in exchange for repricing of conversion and warrants.
• Soluna plans to use the financing to retire existing Convertible Notes, fund AI operations and data center development, and strengthen its balance sheet.
• Operational plans include advancing AI data center designs, preparing for Project Grace, and accelerating development of large-scale projects.

Positive

• Access to $25 million in growth capital through SEPA
• Agreements with noteholders and Series B stockholder to satisfy SEPA conditions
• Planned retirement of existing Convertible Notes to reduce leverage and dilution
• Funding for AI operations and data center development
• Acceleration of large-scale projects (Project Kati and Project Rosa)
• Plans to acquire new sites for additional AI data centers

Negative

• $750,000 waiver fee to be paid to noteholders
• 20% note prepayment premium to be paid
• Repricing of conversion price and existing warrants for Series B stockholder
• Issuance of new warrants to Series B stockholder
• Potential dilution from SEPA equity issuance

Insights

Financial Analyst

This news is significantly positive for Soluna Holdings. The agreements with convertible noteholders and Series B preferred stockholders are important steps towards accessing a $25 million Standby Equity Purchase Agreement (SEPA). This capital infusion could substantially improve Soluna's financial position and growth prospects.

Key financial implications include:

• Debt reduction: Prepayment of convertible notes will decrease leverage and potential dilution.
• Improved liquidity: Access to $25 million in equity financing provides significant working capital.
• Growth funding: Capital for AI operations and data center development could drive revenue growth.
• Balance sheet strengthening: Debt reduction and new equity improve the company's financial health.

However, investors should note the dilutive effect of new warrant issuances and potential share issuances under the SEPA. The $750,000 waiver fee and 20% note prepayment premium also represent short-term costs. Overall, this financing deal appears to position Soluna for stronger growth and improved financial stability, which could positively impact its stock performance in the medium to long term.

Tech Expert

Soluna's strategic moves in the AI and Bitcoin mining space are noteworthy. The company is positioning itself at the intersection of two high-growth tech sectors:

• AI Infrastructure: The focus on AI data centers, including the 2 MW Project Grace and plans for up to 20 MW of additional AI data centers, aligns with the surging demand for AI computing resources.
• Cryptocurrency Mining: While not explicitly mentioned, Soluna's expertise in Bitcoin mining provides diversification and potential synergies with its AI operations.
• Green Energy Focus: Developing green data centers addresses the growing concern over the energy consumption of intensive computing applications.

The advancement of Helix AI data center designs and the development of large-scale projects like the 166 MW Project Kati and 187 MW Project Rosa demonstrate Soluna's ambitious expansion plans. These initiatives could position the company as a significant player in the rapidly evolving AI infrastructure market, potentially leading to substantial revenue growth and market share gains in the coming years.

Enables Prepayment of Convertible Notes and AI Data Center Expansion

ALBANY, N.Y.--(BUSINESS WIRE)-- Soluna Holdings, Inc. (“Soluna” or the “Company”), (NASDAQ: SLNH), a developer of green data centers for intensive computing applications, including Bitcoin mining and AI, today announced its agreement with its convertible noteholders and amendments of its agreements with the holder of its Series B Preferred Stock, important milestones toward access to the previously announced $25 million Standby Equity Purchase Agreement (“SEPA”) with a fund managed by Yorkville Advisors Global L.P. (“Yorkville”).

(Graphic: Business Wire)

Soluna entered into the following agreements with the convertible noteholders and the holder of Series B stock, satisfying a number of the conditions precedent to access the SEPA. They include:

• Convertible Noteholders Agreement: Noteholders will consent to the SEPA, prepayment of the remaining convertible notes and waive rights to participate in the SEPA. In return, the Company will pay a $750,000 waiver fee, prepay a 20% note prepayment premium, and acquire certain Soluna Cloud notes at a discount.
• Series B Preferred Stock Agreement: The holder of Series B will consent to the SEPA, waive participation rights, and agree to warrant and stock conversion limitations. In return, the Company will reprice the current conversion price, reprice existing warrants and issue new warrants to the holder.

In order to access the SEPA, the Company will file an S-1 registration statement with the Securities and Exchange Commission which must be declared effective before it can begin to obtain funding. This is the only remaining significant step since, as previously announced, Yorkville and Soluna mutually agreed not to proceed with the prepaid advances, and to continue to work only within the SEPA.

Key Uses of the Financing Include:

• Retiring existing Convertible Notes reducing leverage and dilution overhang.
• Funding critical Soluna Cloud AI operations and data center development activities.
• Deploying additional capital into projects to significantly improve equity cash flows.
• Strengthening the Company’s balance sheet.

Operationally this means Soluna expects to:

• Advance its Helix AI data center designs.
• Prepare for the build-out of Project Grace – a 2 MW AI data center adjacent to its flagship Project Dorothy 2.
• Accelerate the development of the 166 MW Project Kati and 187 MW Project Rosa.
• Complete the acquisition of new sites for up to 20 MW of additional AI data centers for its Colocation business.

For more information about this financing, please refer to the Company’s upcoming 8-K.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Soluna Holdings, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials, and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about Soluna’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, further information regarding which is included in the Company’s filings with the Securities and Exchange Commission. All information provided in this press release is as of the date of the press release, and Soluna Holdings, Inc. undertakes no duty to update such information, except as required under applicable law.

About Soluna Holdings, Inc (SLNH)

Soluna is on a mission to make renewable energy a global superpower using computing as a catalyst. The company designs, develops, and operates digital infrastructure that transforms surplus renewable energy into global computing resources. Soluna’s pioneering data centers are strategically co-located with wind, solar, or hydroelectric power plants to support high-performance computing applications including Bitcoin Mining, Generative AI, and other compute-intensive applications. Soluna’s proprietary software MaestroOS(™) helps energize a greener grid while delivering cost-effective and sustainable computing solutions, and superior returns. To learn more visit solunacomputing.com. Follow us on X (formerly Twitter) at @SolunaHoldings.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241003284908/en/

Sam Sova

Partner and CEO

SOVA

Sam@letsgosova.com

Source: Soluna Holdings, Inc.

FAQ

What is the value of the Standby Equity Purchase Agreement (SEPA) Soluna Holdings (SLNH) is accessing?

Soluna Holdings (SLNH) is accessing a $25 million Standby Equity Purchase Agreement (SEPA) with a fund managed by Yorkville Advisors Global L.P.

What are the main uses of the financing for Soluna Holdings (SLNH)?

The main uses of the financing for Soluna Holdings (SLNH) include retiring existing Convertible Notes, funding AI operations and data center development activities, deploying capital into projects to improve equity cash flows, and strengthening the company's balance sheet.

What operational plans does Soluna Holdings (SLNH) have with the new financing?

Soluna Holdings (SLNH) plans to advance its Helix AI data center designs, prepare for the build-out of Project Grace, accelerate the development of Project Kati and Project Rosa, and complete the acquisition of new sites for additional AI data centers.

What agreements did Soluna Holdings (SLNH) reach with its convertible noteholders?

Soluna Holdings (SLNH) reached an agreement with convertible noteholders where they will consent to the SEPA, prepayment of remaining notes, and waive rights to participate in the SEPA in exchange for a $750,000 waiver fee, a 20% note prepayment premium, and the acquisition of certain Soluna Cloud notes at a discount.