Cipher Digital Inc. (CIFR) shares jumped on Monday morning after the company revealed plans to raise $810 million in debt to finish building its Stingray data center — a facility that's already fully leased to Amazon Web Services. The broader market was also having a good day, with the Nasdaq up 1.99% and the S&P 500 gaining 0.61%.
The industrial-scale data center operator disclosed that its wholly-owned subsidiary, Stingray Compute LLC, intends to offer $810 million in senior secured notes due 2031 in a private placement. The net proceeds are earmarked to finance the remaining construction costs of the 70-megawatt high-performance computing (HPC) Stingray Facility.
Here's the clever part: the structure of the deal also provides an immediate balance sheet adjustment for the parent company. According to the official press release, a portion of the incoming capital will reimburse Cipher Digital for approximately $63.6 million of prior equity contributions that were used to fund initial capital expenditures for the facility. So not only is the company getting the money to finish the project, it's also getting back some of the cash it already put in.
The notes will carry a full and unconditional guarantee from Cipher Stingray LLC, backed by first-priority liens on substantially all of the issuer's and guarantor's operational assets. That's a lot of legal language, but it basically means the lenders have a strong claim on the company's assets if things go sideways.
The Stingray project is already fully pre-leased to Amazon.com Inc.'s subsidiary Amazon Web Services (AWS). That's a big vote of confidence — AWS doesn't typically sign up for capacity it doesn't think it'll use.
