Tools / Contract library / Cross-default from GPU project loans, and notice of their amendments
Contract library · Neocloud corporate revolvers
Cross-default from GPU project loans, and notice of their amendments
If a neocloud’s GPU project loan defaults, does its corporate revolver default too?
On the filed text, it can. A payment default on, or a default that lets lenders accelerate, any debt of Nscale or a restricted subsidiary above $50m is an event of default under the revolver. SPV Entities are defined as restricted subsidiaries, and the clause has no carve-out for project debt, so a large SPV loan that can be accelerated reaches the revolver. Nscale must also tell the agent promptly of any amendment to an SPV credit agreement or other material debt that changes its principal by more than $300m, and of amendments to GPU purchase money debt that cut its cash by more than $300m or are materially adverse to the lenders. For in-house teams: a GPU project loan is not ring-fenced from the parent’s revolver unless the cross-default says so.
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What the filed contracts say
Contract
What the filed wording says
Nscale corporate revolver
A payment default on material debt of the borrower or any restricted subsidiary is an event of default.
Nscale corporate revolver
So is any other default that lets the holders accelerate it.
Nscale corporate revolver
Material debt is anything above $50m.
Nscale corporate revolver
SPV Entities are restricted subsidiaries, and the clause has no carve-out for them.
Nscale corporate revolver
Amendments to an SPV credit agreement or material debt that change principal by more than $300m must be notified.
Nscale corporate revolver
So must amendments to GPU purchase money debt that cut cash by more than $300m or harm the lenders.
The filed wording
(f) the Borrower or any Restricted Subsidiary shall (i) fail to pay any principal, interest or other amount, regardless of amount, due in respect of any Material Indebtedness (other than the Obligations), when and as the same shall become due and payable (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) beyond any applicable grace period, or (ii) after giving effect to any grace period, fail to observe or perform any other term, covenant, condition or agreement contained in any agreement or instrument evidencing or governing any such Material Indebtedness, if the failure referred to in clause (i) or (ii) results in such Material Indebtedness becoming due prior to its stated maturity (or in the case of any such Indebtedness constituting a Guarantee in respect of Indebtedness becoming payable) or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
Nscale revolving credit and guaranty agreement, with its GPU SPV carve-outs, section 9.01(f) · Nscale S-1, Exhibit 10.18
Each extract is quoted from the contract as filed with the SEC, checked against the filed text when it was added; “…” marks words left out. Filers redact commercial terms, so a [***] or [*] is the filer's, not ours. The summaries describe the wording, not how a court would read it, and each contract's defined terms and other clauses can change the effect. General information drawn from public filings. It is not legal advice on any transaction, and using this page does not create a lawyer-client relationship. Views are personal.
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