Applied Digital Corporation ( APLD ) stock traded higher by more than 20% at the start of Tuesday’s session.

The company entered into a $5 billion perpetual preferred equity financing facility with Macquarie Asset Management (MAM).

This deal is aimed at supporting Applied Digital’s high-performance computing (HPC) business.

Under the development, MAM will invest up to $900 million, supporting the 400 MW build-out of the Ellendale HPC Campus. The financing structure includes the issuance of perpetual preferred equity units and common equity units, with MAM investing $2.25 million per executed lease for each 1 MW of capacity.

Proceeds from the deal will help complete the Ellendale, North Dakota-based campus build-out. They will also help repay approximately $180 million in bridge debt and recover over $300 million of equity investment.

Also Read: US Stocks Poised To Gain After Tech Stocks Drag Nasdaq Down, S&P 500 Trades At 23x Forward Earnings

Additionally, MAM holds a right of first refusal for future HPC data center project funding, potentially adding up to $4.1 billion over the next 30 months.

The preferred equity carries a 12.75% annual dividend rate, and increases by 87.5 basis points after five and six years.

According to Benzinga Pro, APLD stock has gained over 40% in the past year. Investors can gain exposure to the stock via VanEck Digital Transformation ETF ( DAPP ) .

The common equity represents 15% of APLDH’s fully diluted common equity at issuance. The facility is contingent upon executing a lease with a hyperscaler for the 100 MW Ellendale HPC data center and meeting customary closing conditions.

Applied Digital ( APLD ) CEO Wes Cummins highlighted the partnership’s potential for significant growth.

“We are excited to have MAM’s support as we establish ourselves as a leader in the Tier 3 data center infrastructure sector, while continuing to develop and operate large-scale, state of the art data centers for world-class customers at the forefront of the AI revolution,” Cummins said.

Applied Digital ( APLD ) said it aims to capitalize on this demand with technologies and data center solutions, including GPU cloud services and liquid-cooling infrastructure tailored for AI and machine learning workloads.

Price Action: Applied Digital ( APLD ) stocks are trading higher by 21.7% to $9.453 premarket at last check Tuesday.

Read Next:

Meta Investors Push Mark Zuckerberg To Replace $72B Cash With Bitcoin To Combat Inflation: Here's What It Means For Investors

Image: Shutterstock