The US technology group Super Micro Computer is faced with the possibility of having to repay bonds worth up to $1.725 billion early. This threatens to happen if the company is delisted from the Nasdaq stock exchange – a scenario that seems quite realistic given ongoing accounting problems. Alarming for the holders of the convertible bonds, which mature in March 2029, is the prospect of early repayment if a delisting actually occurs. The background: Super Micro missed an August deadline to submit its annual financial report, and the previous auditor Ernst & Young also announced its withdrawal. Such a move would be a painful setback for a company that has previously benefited greatly from demand for powerful servers and artificial intelligence hardware. However, Super Micro’s chief financial officer, David Weigand, was optimistic. In a conversation with analysts, he emphasized the stable relationships with the banks and said: ‘We are confident that the capital markets will remain accessible to us.’ The company was also working on a compliance plan that could push the deadline for submitting audited financials to February 2025. Another problem could be the share price. Since a peak in March, shares have fallen 81%, resulting in a decline in market value of about $53 billion. An interesting side note: The bonds sold in February have a zero coupon, a fallout from the tech boom during the pandemic when companies like Peloton Interactive and Snap issued similar interest-free bonds. With liquidity of around $2.1 billion, Super Micro has some flexibility to realign debt ratios. Still, the potential maturity of this massive amount of debt remains a serious risk, as Wedbush analyst Matt Bryson noted.
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