IREN Ltd's stock plummeted 5.05% during intraday trading on Monday, as investors reacted to the company's announcement of a major debt financing package.
The AI cloud provider announced it has closed a $3.65 billion investment-grade GPU financing facility to support the delivery of its AI Cloud contract with Microsoft. The financing comprises a $2.10 billion U.S. private placement and a $1.55 billion delayed draw term loan, with a blended cost of debt of 6.00%.
While the financing will fund approximately 96% of the $5.81 billion GPU capital expenditure for the Microsoft contract, market participants appear concerned about the company's increased leverage and debt servicing costs. The facility is secured against the GPUs and associated contracted cash flows, with parent company guarantees on specified obligations.