Can a neocloud keep its GPU project companies out of its corporate revolver?
Yes. Nscale’s revolver lets it designate “SPV Entities”: special purpose subsidiaries formed to own, build, buy or operate data centre, computing or power contracts and equipment, or to finance them, that are expected to borrow under a separate SPV credit agreement. That includes equipment debt. SPV Entities are excluded subsidiaries, so they do not guarantee the revolver or give it security, and they are left out of the 80% guarantor coverage test on assets and EBITDA. They remain restricted subsidiaries, though, so the revolver’s covenants still reach them. For in-house teams: this is the structure that lets a project lender take the GPU company’s shares and assets while the corporate revolver sits above it.
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What the filed contracts say
Contract
What the filed wording says
Nscale corporate revolver
An SPV Entity is formed to own, build, buy or operate data centre, computing or power contracts and equipment, or to finance them.
Nscale corporate revolver
It must be expected to borrow, directly or through another SPV, under a separate SPV credit agreement.
Nscale corporate revolver
An SPV credit agreement expressly includes equipment debt.
Nscale corporate revolver
SPV Entities are excluded subsidiaries, so they do not guarantee the revolver.
Nscale corporate revolver
Guarantors must hold 80% of gross assets and of EBITDA, with the SPVs left out of the calculation.
Nscale corporate revolver
SPV Entities stay restricted subsidiaries, so the revolver covenants still apply to them.
The filed wording
“SPV Entity” means (a) any special purpose Restricted Subsidiary of the Borrower designated by the Borrower as an “SPV Entity” that (i) is formed for the purpose of (A) owning, constructing, acquiring (including by making deposits or paying installments in connection therewith) or operating any contracts and/or equipment related to data centers, computing, power generation, or any combination thereof, or (B) obtaining financing in connection with any of the foregoing, and (ii) is reasonably expected to incur Indebtedness pursuant to a Future SPV Credit Agreement or with respect to which one or more other Restricted Subsidiaries are reasonably expected to incur Indebtedness pursuant to a Future SPV Credit Agreement; and (b) any special purpose Restricted Subsidiary of the Borrower designated by the Borrower as an “SPV Entity” that is reasonably expected to incur Indebtedness pursuant to a Future SPV Credit Agreement, the proceeds of which are expected to be used in connection with a Restricted Subsidiary described in clause (a) above.
Nscale revolving credit and guaranty agreement, with its GPU SPV carve-outs, section 1.01, “SPV Entity” · 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.
InfraCompute Weekly
The week in compute finance, read from the filings.
Deals, terms and the clauses behind them, for the people financing data centres, GPU clouds and the power behind them. By Randeep Bubbra.
