Soluna Secures New $25M Growth Capital Line

Rhea-AI Summary

Soluna Holdings (NASDAQ: SLNH) has secured a $25 million Standby Equity Purchase Agreement with Yorkville Advisors Global. The initial $10 million draw will be used to repay convertible notes and fund data center projects. This financing will enable Soluna to:

• Fund Soluna Cloud AI operations and data center development
• Deploy capital into projects to improve equity cash flows
• Retire existing Convertible Notes
• Strengthen its balance sheet

The deal structure offers flexible terms, including unsecured financing with a one-year term and 0% interest. Soluna plans to advance AI data center designs, prepare for a 2 MW AI data center build-out, accelerate the 166 MW Project Kati development, and acquire new sites for up to 20 MW of additional AI data center development.

Positive

• Secured $25 million in growth capital through a Standby Equity Purchase Agreement
• Initial $10 million draw to repay convertible notes and fund data center projects
• Flexible financing terms: unsecured, one-year term, 0% interest, no warrants
• Enables funding for AI operations and data center development
• Simplification of capital structure
• Potential for additional $15 million drawdown for future growth

Negative

• Potential shareholder dilution due to equity-based financing
• Effectiveness of S-1 registration and shareholder approval required for full initial draw

Financial Analyst

Soluna's new $25M growth capital line is a significant development, providing much-needed financial flexibility. The initial $10M draw will help retire existing convertible notes, simplifying the capital structure. This move could potentially reduce interest expenses and dilution risk for shareholders.

The SEPA's structure, with no warrants and flexible terms, is favorable for the company. It allows for managed conversions and additional drawdowns, which could help Soluna maintain better control over its equity. However, investors should note that future drawdowns may still lead to dilution.

The focus on AI data center development aligns with current market trends, potentially positioning Soluna for growth in a high-demand sector. Yet, the success of this strategy depends on execution and market conditions in the volatile cryptocurrency and AI industries.

Tech Expert

Soluna's strategic pivot towards AI hosting and cloud services is a smart move given the surging demand for AI computing power. The planned 2 MW AI data center adjacent to Project Dorothy and the 166 MW Project Kati demonstrate a significant scaling of operations.

The company's focus on green data centers is particularly noteworthy. As energy demands for AI and intensive computing rise, sustainable solutions will likely become increasingly valuable. This could give Soluna a competitive edge in attracting environmentally conscious clients.

However, the AI infrastructure market is highly competitive, with tech giants already heavily invested. Soluna will need to differentiate its offerings and execute flawlessly to carve out a significant market share. The success of this strategy will largely depend on the company's ability to deliver efficient, cost-effective and scalable solutions.

$10M Initial Draw to Repay Convertible Notes, Fund Data Center Projects

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 that it has entered into a $25 million Standby Equity Purchase Agreement (“SEPA”) with a fund managed by Yorkville Advisors Global L.P (“Yorkville“).

(Graphic: Business Wire)

The financing will enable Soluna to:

• Fund critical Soluna Cloud AI operations and data center development activities.
• Deploy additional capital into projects to significantly improve equity cash flows.
• Retire its existing Convertible Notes.
• Strengthen its balance sheet.

“The convergence of renewable energy and computing is real. The energy demands of all forms of computing, including AI, are on the rise. With this financing, and simplification of our capital structure, we are now well-positioned to bring our winning formula to bear on the new opportunities ahead. By deploying this fresh capital to fuel business development in AI Hosting and Cloud and to accretive data center projects we can begin to scale the Soluna story,” said John Belizaire, CEO of Soluna.

This new capital and simplification of the capital structure will enable Soluna to advance its AI data center designs, prepare for the build-out of a 2 MW AI data center adjacent to its flagship Project Dorothy, accelerate the development of the 166 MW Project Kati – which includes AI – and complete the acquisition of new sites for up to 20 MW of additional AI data center development. The secured Convertible Notes will be replaced with more flexible unsecured financing.

Deal Structure and Strategic Impact

The Yorkville SEPA offers flexible terms designed to support Soluna's growth objectives:

• Two Initial tranches – The initial $10.0 million Advance will net $9.3 million to Soluna and will be provided in two tranches, 70% at closing following receipt of third party consents and satisfaction of customary closing conditions and 30% upon the effectiveness of an S-1 registration to be filed and obtaining necessary shareholder approvals via a shareholder meeting to be scheduled.
• Unsecured and flexible – The financing is unsecured, with a one-year term and 0% interest, free from warrants or other complex financial instruments.
• Managed conversion – The agreement includes caps and floors on monthly conversions, subject to meeting certain conditions, that offer predictability in managing equity.
• Additional drawdowns – Further access to the remaining $15 million SEPA is possible as the initial advance is repaid and thereafter, providing continued financial flexibility.

“This financing’s lack of warrants and other variable features will help us achieve our goal to simplify our capital structure while delivering much-needed growth capital,” continued Belizaire, “both of which return great value to Soluna and our shareholders.”

Northland Capital Markets acted as the sole placement agent, with the 2nd Pre-Paid Advance contingent on S-1 registration and shareholder approval.

More information about the financing can be found in 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/20240909709160/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 secured by Soluna Holdings (SLNH)?

Soluna Holdings (SLNH) has secured a $25 million Standby Equity Purchase Agreement with Yorkville Advisors Global.

How will Soluna (SLNH) use the initial $10 million draw from the financing agreement?

Soluna (SLNH) will use the initial $10 million draw to repay convertible notes and fund data center projects, including AI operations and development activities.

What are the terms of the financing agreement for Soluna Holdings (SLNH)?

The financing agreement for Soluna Holdings (SLNH) is unsecured, with a one-year term, 0% interest, and no warrants. It includes caps and floors on monthly conversions and offers flexibility for additional drawdowns.

What projects does Soluna (SLNH) plan to develop with the new financing?

Soluna (SLNH) plans to advance AI data center designs, prepare for a 2 MW AI data center build-out, accelerate the 166 MW Project Kati development, and acquire new sites for up to 20 MW of additional AI data center development.