Soluna Inks Agreement with Noteholders to Bolster Balance Sheet Ahead of Halving

Rhea-AI Summary

Soluna Holdings, Inc. (NASDAQ: SLNH) secures a $3 million funding arrangement and the right to raise equity through a warrant reprice and exchange program. The company aims to capitalize on growth opportunities by adjusting its capital formation strategy.

Insights

Financial Analyst

The amendment to the convertible noteholders' agreement by Soluna Holdings, Inc. signifies a strategic financial maneuver to strengthen the company's capital structure and provide flexibility for future growth. The reduction in conversion price and the reprice & exchange program for warrants are designed to incentivize noteholders to convert their debt into equity, potentially reducing the company's debt burden and interest expenses. Additionally, the at-the-market offering (ATM) with a floor price sets a baseline for equity fundraising, aiming to protect shareholder value while allowing the company to raise capital as needed.

From a financial perspective, the tiered approach to the ATM floor price suggests a calculated risk management strategy, providing a cushion for the company's stock price while also acknowledging the potential for market fluctuations. The ability to extend the maturity date of the notes, with a modest increase in principal, offers the company breathing room to manage its finances without immediate pressure to repay the debt, which could be beneficial if the company experiences cash flow challenges.

Market Research Analyst

Within the context of the Bitcoin mining and green data center industry, Soluna Holdings' capital formation strategy reflects a proactive approach to leveraging the volatile yet burgeoning market for cryptocurrency-related services. The company's focus on green data centers aligns with the increasing demand for environmentally sustainable technology solutions, which could provide a competitive edge and attract ESG-focused investors. However, the inherent volatility in cryptocurrency markets may introduce additional risk factors that could affect the company's stock performance and the success of its ATM offering.

It's also important to note that the equity market's reception of such financial instruments will be influenced by the broader technology and cryptocurrency sector sentiment. Market trends, regulatory changes and investor appetite for risk in these sectors will be critical in determining the effectiveness of Soluna Holdings' amended financial arrangements and its ability to raise the intended capital.

Legal Expert

The stipulation that the amendments are subject to stockholder approval at the company's annual meeting is a key governance consideration, ensuring that shareholders have a voice in significant corporate finance decisions. This requirement reflects adherence to corporate governance standards and SEC regulations, which mandate shareholder approval for material changes to financial instruments. The filing of an 8-K with the Securities and Exchange Commission enhances transparency for investors, providing them with the necessary information to assess the potential impact of the amendments on their investments.

Furthermore, the legal mechanisms in place to adjust the ATM floor price and extend the maturity date of the notes indicate a well-structured agreement that balances the interests of the company with those of the noteholders. By setting clear terms for these adjustments, the company mitigates the risk of legal disputes and provides a stable framework for future capital raising activities.

Includes $3M Funding Arrangement and Right to Raise Equity

ALBANY, N.Y.--(BUSINESS WIRE)-- Soluna Holdings, Inc. (“SHI” or the “Company”), (NASDAQ: SLNH), the parent company of Soluna Computing, Inc. (“SCI”), a developer of green data centers for Bitcoin mining and other intensive computing applications, announced today the Company entered into a fourth amendment with the convertible noteholders to reprice certain warrants that would allow the Company to raise up to $3 million. In addition, the Company will be allowed to file an at-the-market offering (ATM) with an initial floor price of $10 per share to take advantage of future financing opportunities in the equity markets.

John Belizaire, CEO of Soluna Holdings, commented, “We are progressively tuning our capital formation approach to take advantage of the growth opportunities on the horizon for the company. This amendment is part of a multi-prong approach to support our scaling plans.”

The Company and the noteholders entered into a fourth amendment effective as of February 28, 2024 allowing the Company to raise $3 million via a warrant reprice & exchange program and to undertake ATM transactions in the future provided the market price of the shares of common stock shall be at least $10 per share initially (ATM Floor), which is reduced to $8 per share six months after the ATM is effective and $6 per share 12 months after the effective date of the ATM. The ATM Floor is eliminated once the aggregate principal balance of the notes is less than $1.5 million.

In addition, the Company will be permitted to unilaterally extend the maturity date of the notes for two 3-Month extensions if prior to the then-in-effect maturity date, the Company gives notice to the noteholders and increases the principal amount of the notes on the date of each such extension by two percent (2%) of the principal amount of the notes outstanding on the date of the amendment per each extension.

In consideration of the new rights described above, the Company will:

• Reduce the conversion price of the convertible notes to $3.78 per share;
• The noteholders will receive an aggregate of 850,000 three-year warrants exercisable at $0.01 per share;

In addition, the Company will implement a warrant program to provide up to $3 million of capital to help fund its growth, as follows:

• An aggregate of 320,005 warrants held by the noteholders will have the exercise price reduced to $3.78 per share;
• An aggregate of 478,951 warrants held by the noteholders will have the exercise price reduced to $6.00 per share (Repriced Warrants). For every one Repriced Warrant exercised by a Purchaser, such Purchaser shall receive 1.36 new five-year warrants with an exercise price of $0.01, 1.6 new five-year warrants with an exercise price of $4.20, and 1.6 new five-year warrants with an exercise price of $5.70. Pursuant to additional agreements with holders of another 46,618 outstanding warrants the resulting total of Repriced Warrants is 530,569.

The foregoing is subject to stockholder approval at the Company’s annual meeting of shareholders, to be held no later than May 30, 2024.

The text of the amendment is included in an 8-K to be filed with the Securities and Exchange Commission.

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/20240301208019/en/

Sam Sova

Partner and CEO

SOVA

Sam@letsgosova.com

Source: Soluna Holdings, Inc.

FAQ

What funding arrangement did Soluna Holdings, Inc. secure?

Soluna Holdings, Inc. secured a $3 million funding arrangement.

What is the ticker symbol for Soluna Holdings, Inc.?

The ticker symbol for Soluna Holdings, Inc. is SLNH.

What is the purpose of the warrant reprice and exchange program?

The warrant reprice and exchange program aims to allow the company to raise up to $3 million.

Who is the CEO of Soluna Holdings, Inc.?

John Belizaire is the CEO of Soluna Holdings, Inc.

When is the Company's annual meeting of shareholders scheduled to be held?

The Company's annual meeting of shareholders is scheduled to be held no later than May 30, 2024.