Ault & Company, Inc. Announces Abandonment of Dutch Tender Offer to Acquire Shares of Common Stock of Hyperscale Data, Inc.

Rhea-AI Summary

Ault & Company has announced the abandonment of its planned cash tender offer to purchase up to 111,000 shares of Hyperscale Data's Class A Common Stock, which was initially proposed at a price range of $7.50 to $10.00 per share. Instead, the company will pursue a new securities purchase agreement that grants them the right to acquire up to $25 million in Hyperscale Data's Series G Convertible Preferred Stock.

The company maintains that Hyperscale Data's current stock price is below its long-term intrinsic value and views the preferred shares investment as a demonstration of their continued support. Ault & Company, along with its affiliates, currently owns approximately 91.7% of Hyperscale Data's outstanding common stock, primarily through Series C Convertible Preferred Stock and warrants.

Positive

• Secured rights to purchase up to $25 million in Series G Convertible Preferred Stock
• Already holds significant control with 91.7% ownership stake

Negative

• Abandonment of planned tender offer indicates change in acquisition strategy
• Current stock price trading below company's perceived intrinsic value

Insights

Financial Analyst

The abandonment of Ault & Company's Dutch tender offer for Hyperscale Data shares marks a strategic pivot in their investment approach. Instead of pursuing direct share purchases at <money>$7.50-$10.00</money> per share, they're opting for a <money>$25 million</money> Series G Convertible Preferred Stock investment. This shift is particularly notable given Ault's already substantial <percent>91.7%</percent> beneficial ownership stake.

The move to preferred shares over common stock suggests a more complex financial strategy: preferred shares typically offer fixed dividends and superior claims on assets, while potentially providing conversion rights that could increase their equity stake further. This structured approach allows Ault to maintain control while providing Hyperscale with needed capital, though it may signal concerns about immediate market conditions or valuation.

For minority shareholders, this development carries mixed implications. While the abandoned tender offer removes an immediate premium opportunity, the substantial preferred share investment demonstrates continued confidence in Hyperscale's long-term prospects. However, the potential dilution effect from future preferred share conversions warrants careful monitoring.

Legal Expert

The transaction structure revision reflects sophisticated securities law considerations. Abandoning the Dutch tender offer in favor of a preferred stock purchase agreement demonstrates careful regulatory navigation, particularly given the existing high ownership concentration. This approach likely helps address potential Securities Exchange Act compliance concerns while maintaining strategic flexibility.

The explicit mention of potential future tender offers being subject to board and regulatory approvals indicates proper corporate governance awareness. However, the <percent>91.7%</percent> ownership concentration already held by Ault and affiliates raises interesting questions about minority shareholder rights and fiduciary obligations. The disclosure of key personnel's roles (Executive Chairman, CEO, President) holding significant ownership positions through various instruments (preferred stock, warrants) appropriately addresses transparency requirements while highlighting potential governance considerations.

LAS VEGAS, Jan. 02, 2025 (GLOBE NEWSWIRE) -- Ault & Company, Inc. (“Ault & Company”), today announced its abandonment of its planned cash tender offer to purchase up to 111,000 shares of Class A Common Stock, $0.001 par value per share (“Common Stock”), of Hyperscale Data, Inc., a Delaware corporation (“Hyperscale Data”), at a price not greater than $10.00 nor less than $7.50 per share of Common Stock, net to the seller in cash, less any applicable withholding taxes and without interest, in order to enable Ault & Company to pursue transactions under the recently executed securities purchase agreement with Hyperscale Data, pursuant to which Ault & Company has the right to purchase up to $25 million in shares of Hyperscale Data’s Series G Convertible Preferred Stock in compliance with the federal securities laws.

Ault & Company continues to believe that the current stock price of the Common Stock is below Hyperdrive Data’s long-term intrinsic value per share and believes that an investment in the Preferred Shares demonstrates the continued commitment of Ault & Company to supporting Hyperscale Data and its stockholders. Ault & Company may consider revisiting a tender offer once the purchase of the Preferred Shares is completed, however there can be no assurance thereof. Any potential future tender offer would be subject to Ault & Company board approval (including an evaluation of the then current market price of the Common Stock), regulatory approval and other customary closing conditions. Details regarding any potential future tender offer, if commenced, would be filed with the Securities and Exchange Commission (the “SEC”) and distributed to Hyperscale Data’s stockholders.

The principal business of Ault & Company is investing in securities. Ault & Company, together with its affiliates (including, Milton C. Ault III, Hyperscale Data’s Executive Chairman, William Horne, Hyperscale Data’s Chief Executive Officer and Vice Chairman and Henry Nisser, Hyperscale Data’s President and General Counsel), beneficially own approximately 91.7% of Hyperscale Data’s outstanding shares of Common Stock, primarily through the ownership of Series C Convertible Preferred Stock and warrants to purchase Common Stock.

This press release is for informational purposes only and shall not constitute an offer to buy or sell Common Stock or any other securities.

Ault & Company Investor Contact
ir@aultandcompany.com

FAQ

Why did Ault & Company abandon its tender offer for Hyperscale Data (GPUS) shares?

Ault & Company abandoned the tender offer to pursue a new securities purchase agreement allowing them to buy up to $25 million in Hyperscale Data's Series G Convertible Preferred Stock.

What is the new investment structure between Ault & Company and Hyperscale Data (GPUS)?

The new structure involves a securities purchase agreement giving Ault & Company rights to purchase up to $25 million in Series G Convertible Preferred Stock, replacing the previous tender offer plan.

What percentage of Hyperscale Data (GPUS) does Ault & Company currently own?

Ault & Company, together with its affiliates, beneficially owns approximately 91.7% of Hyperscale Data's outstanding common stock through Series C Convertible Preferred Stock and warrants.

Will Ault & Company consider another tender offer for Hyperscale Data (GPUS) shares in the future?

Ault & Company may consider revisiting a tender offer after completing the preferred shares purchase, but this would be subject to board approval, regulatory approval, and market conditions.