The AI server manufacturer SUPER MICRO COMPUTER INC announced on Wednesday that it has finalized the pricing for its previously disclosed equity and equity-linked financing transactions. The total proceeds from this financing are estimated to reach up to $7 billion, with the funds earmarked for procuring critical components to fulfill the company's recently secured AI server backlog, which is valued at approximately $39 billion.
The company's official statement outlined that the financing package is structured in three parts. The first component involves a concurrent underwritten public offering. This includes the issuance of roughly 45.45 million shares of common stock priced at $27.50 per share, aiming to raise about $1.25 billion. Additionally, 75 million depositary shares will be issued at $50 per share to raise approximately $3.75 billion. Each depositary share represents a one-twentieth interest in a share of newly issued 7.0% Series A Mandatory Convertible Preferred Stock. Furthermore, the company plans to initiate an at-the-market equity offering program for up to $2 billion in the third quarter of 2026.
The preferred stock underlying the depositary shares carries an annual dividend rate of 7.0% and a liquidation preference of $1,000 per share. This preferred stock is scheduled to automatically convert into common stock around June 1, 2029, with the conversion ratio dependent on the company's share price performance at that time. The common stock offering is expected to close around June 12, while the depositary share offering is anticipated to close around June 15.
The company reported that in recent weeks it has received AI server orders from more than 20 customers, with a total value of about $39 billion. It plans to fulfill these orders over the coming quarters. The demand spans several key areas, including deployments of NVIDIA GPUs, hyperscale cloud infrastructure, sovereign AI projects, and large language model training clusters.
Assessing the Financing's Impact
The scale of this financing is significant relative to the company's market capitalization of approximately $36 billion, raising investor concerns about potential equity dilution. Since the financing plan was initially disclosed, shares of SUPER MICRO COMPUTER INC have declined by more than 20%. Despite holding a massive order book, investors are carefully weighing the growth opportunity presented by surging demand for AI infrastructure against the dilutive effect of the new capital raise.
JPMorgan, Goldman Sachs, and Citigroup acted as the joint lead book-running managers for this financing transaction.
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