The AIB Data Center corporate update call. My name is Ted Haberfield from MZ Group, a full-service investor relations firm, and I'm going to be your host for today's presentation. Look, I'm really excited to be here as we discuss the opportunities ahead for AIB, and particularly on just the heels of what was announced over the last day or so with their contract with Nebius. AIB's model is really just built around securing power first and then deploying standardized capacity in manageable increments. Just a quick note. This webinar is currently in listen- and- watch mode only. We'll open things up for a live Q&A immediately following the presentation. In the meantime, feel free to use the chat feature to submit your questions. While you're there, go ahead and just drop us a quick message.
The chat feature should be to your right when you're looking at the screen. Just confirm that you can hear us clearly and let us know where you're watching from today. That would be great. Please note a replay link for this webinar will be emailed to you immediately after we conclude today's session, so just keep an eye out for that email. Thank you, Jack. Appreciate you letting us know. Welcome. Listen, before we proceed any further, I do want to just go and remind you that today's webinar contains certain forward-looking statements from management concerning future events. I'm not going to read this entire slide to you, but please note that these forward-looking statements are based on the company's current beliefs, assumptions, and expectations regarding future events, which in turn are based on information currently available to the company.
By their nature, forward-looking statements address matters that are subject to risks and uncertainties. A variety of factors could cause actual events and results to differ materially from those expressed in these statements. With that said, I'd like to now just present to you your presenters for today. We have the CEO of AIB Data Centers, Mr. Jerry Tang. Jerry has over 20 years' experience as senior executive in global banking and infrastructure development, overseeing $40 billion in real estate and capital market transactions. We also have Jolienne Halisky. Hello, Jolienne. She is a CPA. She's got 20+ years as a senior financing roles including her tenure over at Deloitte, and she's actually been working with Jerry Tang for the last 2.5 years.
Today, Jerry and Jolienne will give us really a quick overview of the company, but also really show us some developments that took place, especially off of the announcement over the last day. We'll also go over some other really important items that's timely. With that said, I'm going to introduce you to Jerry Tang, CEO of AIB Data Centers. Jerry, the floor is yours.
Thank you, Ted. I'm excited to present. One thing I want to make clear is the. Hold on one sec, [mate]. Can you hear me?
Yes, we can hear you just fine, Jerry.
Okay.
The floor is yours.
Sorry, there was an echo just now.
I think it's gone now.
Yeah. We are super excited to have this contract executed. It is a 50 MW IT load with 12 years initial term. It's a firm contract with no termination options. If there were termination options, it would be fully paid. We worked very hard to get this client, and they have done extensive due diligence on AIB, on the power contracts, on the site, on our team's ability to execute, construct the data center, getting that long lead time equipments. We have been through a lot to get the trust to sign this contract with us. With that said, this contract, because of customer confidentiality, we cannot disclose the exact total contract value. However, here on this table, we are offering you some comparisons.
These three companies have signed three different contracts ranging from $1.87 million per megawatt per year to $2.16 million per megawatt per year on IT load. I can tell you our rate is higher than all three of those. You can kind of do the math to land where the TCV is. We just can't say that ourselves. Secondly, we are receiving a material amount of prepayment from the client, and we can use that for POs and other construction costs right away. Based on that, we do not need to raise any equity. I'll say that again, we do not need to raise any equity, full stop. Again, this is a first proof of point of execution. If you go back to May, we signed the 65-MW utility contract, 15-year term.
In September, four months later, we signed this client offtake contract, 50 MW IT load. Basically, the entirety of that 65 MW utility load. If you translate into IT load is 50 MW. Next step will be getting the financing done and the start of construction. The construction actually will start. It's already kind of starting. We already started the decommissioning on the site of the existing Bitcoin mining facility. I'm going to skip this because I think people are very interested in knowing how we fund the whole project. Right now, we estimate the project to cost around $800 million. We estimate we can get a $560 million in construction debt, $140 million in preferred equity. Those $700 million will be all on project level and will need $100 million-ish equity to fund the remaining cost. All that will be funded with prepayments.
If you look at our pipeline, CLT1 is on track to be built. It's contracted. It will be built in the next 10 months, 14 months. We already control another four sites. As a matter of fact, DFW1, we already own the site and have ESA executed. If you add all these up, we'll have another 280 MW that we can potentially contract with our customers and start to construct them in the next three to six months. Our strategy, as you can tell, is to focus on smaller data centers, anything sub-100 MW, so we don't have to get on a long process to get permits, get approvals. As you know, the pushback from communities on data center, it's pretty elevated right now.
Our strategy is to fly under the radar by focusing on smaller data centers and not to chase the shiny objects, the 200 MW, 300 MW data centers. If you just focus on the power you have, the 50s, the 60s, the 70s, that can be energized in the next six months, 12 months, you're not going to be distracted by the few hundred megawatts that's theoretically available in the next two years, three years, four years. You can focus more of your energy on execution, getting that customer contract signed, get that capacity delivered to customer, and start to deliver the cash flow. We believe we have a wonderful team to execute. I myself is a finance expert. I have done over $40 billion in commercial real estate finance, so this is my strong fit.
Chris has done over 3 GW of data center construction while he was in Amazon, and he's leading these new projects for us in AIB Data Centers. Gary is an expert in sales and leasing for data centers, so he can lead those sophisticated conversations with clients. But we are not worried about getting clients at all. Every new data center will have four, five, six suitors for the entire capacity. Our goal is very simple. Every data center, we lease to one client. We craft a diversified portfolio. Eight to 10 different clients in the next 24 months. This is the most interesting graph here. We are still trading at a massive discount to our peers, even after we have signed a customer contract. I think the market is mispricing our stock big time.
As we start to show progress on the project, that includes getting the financing closed, getting the POs placed and start to show progress on construction. I believe our per megawatt valuation should revert to the market immediate. To sum up, I think AIB Data Centers can be an amazing investment opportunity. We are already starting to show first proof of execution. All we need to do is rinse and repeat on our new pipeline sites.
Fantastic. Thank you, Jerry. Appreciate your opening remarks. We are going to move on to our Q&A session. We are receiving a number of questions, and management will try to answer them as time permits. However, please forgive us in advance if we are not able to get to your question. I can assure you that management or their advisors will do their best to answer your questions offline by sending you an email or by setting up a call directly with you. Our first question is coming from [Ron]. Appreciate your question, [Ron]. Question is, "On CLT 1, what is the total development budget? How much Nebius prepayment is released before the first hall is commissioned? What coupon and conversion terms are you underwriting for the project referred?
If the prepayment stays in escrow until SLA milestones, what is the sponsor equity check required to reach financial close?" We have got multiple questions. Maybe we can just break it down of what you are allowed to respond to and answer to, Jerry. Thank you.
Yeah. Thanks for this clarifying question. Total budget, as we illustrated in the slide, if we just go back to this slide, is about $800 million. In terms of this prepayment amount, all I can say is it is larger than the $100 million equity requirement for the project. It will be released upon POs and the construction cost. We can start to draw the funds in the escrow, like now. What that means is there is no equity needed in the near term for AIB Data Centers.
I think that might have answered everything there. Am I correct? If the pre—maybe yeah. Okay. If there is anything else, [Ron], that you have, you can just send a follow-up in the chat. That would be great. Just want to make sure you got all your answers. Next question comes from Dhruv. Dhruv asks, "What would be the cost around the project and whether it would be funded fully by customer prepayment?" I think we already answered that, yeah?
Yes.
There's anything else you want to reiterate there, Jerry?
I guess no equity needed for this project. No additional equity needed for this project.
Got you. Let's take a question from Jack. Jack is asking, "Do you expect that this agreement with Nebius will lead to deals with companies of similar quality and size?" Great question.
That's a great question. Yeah. Our goal is to craft a portfolio. Number one, this is great proof, right? Because you need to go through excruciating process of diligence, of our capabilities, the power, the team, the execution, and the POs for long lead time items. When other similar size company look at us, they will have a much better feeling about giving their next capacity requirements to us. Even before we signed this contract with Nebius, we are already being pursued by multiple clients of similar caliber for our other sites. We, as a team, has great credibility in terms of financing, in terms of leasing, in terms of project management, construction. A lot of people has placed a lot of trust in us already. This only adds to that.
Fantastic. Thank you, Jerry. Next question coming from [Fedor]. Hopefully, I said that correctly. [Fedor] is asking a good question, "R eally talking about power passed through Nebius at cost, or is it bundled into the rate? Who bears the tariff risk under the ESA?"
We are the counterparty on the ESA vis-a-vis the utility. However, all the utility costs will be passed through to Nebius.
Fantastic. Short and sweet. [Darren]'s asking four questions, so why don't we just go through each of the four? The first one being, "$800 million for 50 MW of critical load implies approximately $16 million per megawatt. Is this cost high?" Two, "What are timeline for completion of data halls, and are these broken into two 25 MW tranches? Do you have an MSA with NBIS, or is this a one-off deal? Are EBITDA margins in line with pure colocation deals in the space? Then update on Minnesota site." So a little bit to chew through here, but why don't we take the first question, Jerry?
Yeah. I don't think it's high if you do $800 million on a 65 MW utility load. It's about $12 million per megawatt. It's in the range, I would say. We have seen the cost between $10 million - $14 million on utility load. So we're right in the middle of the range for a turnkey build. Second question, the timeline for the first 25 MW is 10 months, from when we receive the escrow funds. The second one is 14 months.
Yeah, I think there's a really good slide. Jerry—
Based on—
—sorry to interrupt.
Yeah.
I think there's a really good slide. I know we passed through it for you.
Oh, yes. This is the slide. Yes.
Shows you the two 25-MW halls and the expectation timeline.
Yeah.
Sorry to interrupt. Go ahead, Jerry.
Yeah, no worries. It is an MSA, and if there are future sites where they are interested in leasing, all we need to do is just to add a PO to it, a purchase order attached to that MSA. We don't need to renegotiate the entire thing. That's one of the reasons why it took a little longer than we thought to get the contract executed. We thought we would have get this executed in July, August, but it took September to have it executed.
What about the EBITDA margins? Is this in line with the pure colocation deals in the space?
Yeah, I think so. The EBITDA margin would be about 90%.
That's fantastic. Is there anything you can share with the Minnesota site?
Yes. We just hired a team member. He's going to be flying to the town to make some progress with this permit.
Okay. Excellent. All right. Hopefully that was helpful, [Darren], and for our audience. Next question is coming from [Todd]. He has actually got a couple questions, so I assume it is the same [Todd]. So first one is, what would you say is a fair share or price, market cap that is, following the Nebius deal in the next 6- 12 months?
Well—
I wonder—
—this is just my personal opinion. I think we should be trading, if you look at some of the comps, we should be trading at least $10 million, $12 million if you use the lowest comp here, $12 million. And we have 65 MW, so you are talking about an $800 million market cap—
Sure.
—assuming we do not contract any new clients.
Yes, good point. Good point. Thank you. A follow-up to [Todd]'s question is, which I think is a really great question, is why did Nebius choose AIB when there are lots of different colocation options for them? What made AIB stand out in your opinion?
Well, number one, there are not many colocation options for them. That's the reality of the market. Also depends on how you define options, right? You can have 1,000 options if your timeline for the capacity is 2029, 2030. But if you narrow down to 2027, 2028, your options are very limited. All 2027, in my mind, all 2027 options are out. Everybody is starting to look at first half, even second half 2028 now. AIB stands out because we can deliver, we give client the confidence that we can deliver that capacity in that 2027, 2028 timeline. We do not just have the power. Obviously, we have the power available already, but also we have worked very hard to secure some equipment that may be long-time lead items. But also we have tremendous amount of construction experiences in data centers. That gives the client a lot of comfort.
Yeah, the team speaks for itself. Thank you. I am going to have Jolienne answer this next one. Hi, Jolienne. This may have been already answered, or not answered, but gone through. But the question comes from [Drew], just asking what financing structure will be used?
Yeah.
I think we can use reference—
Yeah.
—one of the slides—
Slide.
—there. Yeah.
Yes. We've been working with Bank Street for months now. They're renowned in this space in terms of digital infrastructure, and this is the area that they focus on. They've done billions of dollars of deals, so we're really confident in their abilities in terms of securing the debt financers. What we're projecting is a 70% debt position. Just for simple math, on $800 million, that rounds out to about $560 million. The next portion of funding that we're going to bring in is preferred equity, and we're just in the starting phases. There was a question about rates and conversion, but that is a private preferred equity at the project company or project co SPV level. That would be the next source of funding.
That would come in around the $140 million, and that leaves the equity component from AIB to contribute at $100 million. I'll just repeat what Jerry said, there's no planned equity raise to create or to be able to fund that $100 million equity portion to the project level.
Great. Thanks, Jolienne. I am going to try to tackle two questions at the same time here. One from [Fedor], and it is related to a question that I saw a little bit earlier from Jack as well. So, two questions. One is, should negotiations with new customers be faster now that you have gone through your first customer negotiation? The other one was how long did it take? I know we talked about a little bit that it was a little longer than normal because of the details of this master agreement, but maybe you can just address those two in one.
Yeah. If some of you have invested along since June, we were negotiating with another tenant for the same space. We have since then pivoted to Nebius because they are a much larger company and a better balance sheet. We used their form of MSA. So that took about 3.5 months to negotiate that agreement. There are two ways to answer this question. Number one, if we were to lease another site to Nebius, it would definitely be much, much faster because we do not need to renegotiate the MSA. We will use the same MSA. We will just have to change the purchase order attached to the MSA.
Number two, for other clients, so during that negotiation process, we were actually negotiating simultaneously with some other tenants for the same space so we can get similar MSAs largely negotiated so we can speed up the contracting for other sites. We are going to do that on all our new sites going forward, just so we have MSAs in place with as many clients as possible. Many clients are very open to do that as well, even if they are not pursuing any particular site, to shorten that negotiation period.
Okay, good. Thank you for walking us through that, with a lot of the details. Next one comes from [Eduardo]. The $100 million prepayments, I think you were alluding to earlier that it was greater than that, but the $100+ million prepayments are advance of rent?
Yes.
Good. Keep it simple, right? Okay, thank you. This one's coming with an initial N. Will the financial details of the Nebius contract be released at some point? Why is it confidential?
That's a great question. I'm hoping we can release sometime in the future. However, they have told us they do not want to release the TCV. They haven't done that with any other data center developer either, and they are applying similar standard as their off-takers.
Yeah.
However, if you just look at this current slide, you can derive what is TCV. You can get an idea what that TCV is from this slide.
Yeah, Lucid Capital Markets analysts sent out a research note yesterday. They were reiterating in their buy rating and their price target of $6.75 on it. They also estimated your total contract value of approximately $1.25 billion over the next 12 years. Is this something you can speak to as well? Is that somewhat within reason?
Well, you can do the math. If you know how to do math, you can take the WhiteFiber number. As I said, our lease rate is above all three of those guys. If you take, in the worst-case analysis, you take that $2.16 million multiplied by 50 MW, multiplied by 12 years, you get the number.
Understood. The reason probably they want to keep it confidential is they're continuingly negotiating with—
Yes.
—other folks.
Yeah.
Probably the reason, yeah?
Yeah.
Yeah. For both parties. Next question comes from Ron. On the $140 million project preferred, what coupon cash or pick, and does it convert into AIB common, and at what price?
Here's my read. I think the accrual will probably be in the low teens. There will be an equity kicker, 10%-20% on the project level. We are not going to allow any conversion into AIB common. We are just going to be focused on the project level financing.
Okay. Here's a pretty pointed question, but I think it's fair to ask. If you believe there's a big discrepancy between current share price and fair value, will management personally buy shares?
I want to. We have to get our Rule 10b5-1 plan in place to allow us to do that.
Yeah.
Fantastic. Awesome. Great answer. This is coming from [Todd], "Who are you working with to deliver said capacity in the 10-month period you mentioned for the first 25-MW tranche? DataOne?"
I don't know what's this DataOne. We have a GC already. They have been working on this for the past three months, four months together with us. There's a game chart. They already have bids out for all the equipments. They have bids out for the big subs, electrical, mechanical. This is a fully, I guess, prepped, I guess, construction plan in place already.
Good, thank you. We've got about 10 more minutes, give or take. We might be able to do a little bit longer, but good question coming from [Darren]. Given process at Spartanburg, can you enlighten us what characteristics you'd look for in terms of future geographic sites, especially in terms of government community risks?
We prefer geographies that have a more or less clear guidance on data centers and without a whole lot of community pushback. Let me give you an example what that means. In certain states, they already have data center moratorium or data center executive orders in place. Those are places that are more interesting to us. Because even though they have these regulations, executive orders in place, it gives us a lot of clarity on what's doable, what's not. In most of these states, they have a cutoff, be it a 50 MW, be it a 75 MW, or 100 MW. We know we have the play field for us.
Excellent. Another question from [Todd] is, "When will meaningful revenue start hitting the company's financials going forward?" That is a great question, especially now that you have contracted revenue. When will it actually start to kick in within the financial statements?
Jolienne, you want to answer that?
Yeah. I can grab that one. As you can, we refer to the Data Hall A coming online in 10 months. We would expect operational cash flow to be generated from this site within those 10 months. That will bring us pretty much into Q4 of 2027.
I want to add to that. We actually have on the corporate level, we have a development fee that we are going to charge to the project. The company will get some cash flow from the project as a developer. In addition to that, there is a profit that can be generated from NRC, non-recurring cost. What that means is we are going to do the build-out inside of the white space, the data hall, and we are entitled to a markup to those costs, even though we are not paying for them.
How is the prepayment accounted for on the P&L?
There's a few different components. There's the escrow funds. Because a portion of that is a rental prepayment as a security deposit, that goes into a deferred rent. There's also the NRC charges, that fit-out component, that actually comes in as a property, plant, and equipment.
Thank you. Very thorough. CPA, obviously. Thank you. This next one comes from Dhruv. Does the current CLT1 financing plan require any additional issuance of common shares? I think Jerry—
No.
—answered this—
No.
—a handful of times.
Period.
Yeah. Just thought we'd throw that one at you again, Jerry. [Aviv], "Can you say more about how far along AIB is in obtaining financing for the 70% loan portion and the terms for that?"
Sure. I can speak to that.
Jolienne can take that, yeah.
Yeah. We've been working, I think I mentioned a bit previously, we've been working with Bank Street for months now, probably since late April, early May. Just developing models, developing data rooms, just structuring exactly what is going to be that optimized capital stack. Just developing the teamwork between our team, their team, and obviously can't go out. They've been warming up their financers and their debt lenders for months now on an anonymous basis because no lease was signed. Since lease has been signed, we have been signing or executing NDAs and getting rolling full steam to actually bring term sheets in and assess who the best debt partners are going to be. They have no reservations from their end in terms of being able to meet that debt component and to bring in those preferred equity partners.
Just add to that, I was a banker, I was a credit guy. I have done over $40 billion deals in commercial real estate. Many of them are construction loans and very large loans. I can tell you I'm talking to multiple banks. Obviously, we retain Bank Street as our advisor. The market color gives me a lot of confidence. This will be a very liquid piece of paper.
Great. Thank you.
We have structured the contract properly so that the credit underwriting will be, w e have basically everything that a lender is looking for in our contract to make it very financeable.
Great. Since we are on that subject, [Philip] wanted to ask, how do you plan to finance the equity portion of the construction cost?
It is financed by the customer prepayments.
Yeah.
All right. Let me just repeat that again. The equity in this capital stack will be funded by customer prepayments.
Yep. Okay. Thank you.
I think, too, I'll just add to that, there is already equity in the project with the pre-construction and decommissioning costs. I think maybe not everyone in the audience realizes that we did a follow-on offering already, and funding was provided in that raise to pull forward into the pre-construction cost, which is equity into the project already.
Okay. We've got time for one more question. I think it's a pretty good question, coming from M here, "Are you in active negotiations with clients for your other sites?"
Yes, I am. With multiple owned, two of these sites that are in a more or less advanced. Each site, we have multiple clients looking at them right now. I would say at least five, six clients.
Fantastic. Well, before we conclude today, I want to thank our presenters, Jerry and Jolienne, and also you, our audience, for joining us today. For more details about AIB and to set up a call with the team, you can visit us at invest.aib.us. That's invest.aib.us. Their corporate website is aib.us. Now I'm going to hand it back over to Jerry for some concluding words. Jerry?
Yeah, thanks. I see there are some existing investors in the company here today. I appreciate your patience and the trust. All we can do is continue to execute, keep our heads down, and not look at the stock price.
Great.
Awesome.
Thank you very much. Great. Thank you. Well, folks, that'll wrap us up for today. As a reminder, you will be receiving an email that includes details of the webinar replay, so keep an eye out for that. That concludes our corporate update call today. Thank you again for joining us, and make sure to check us out at invest.aib.us, and have a great rest of your day. Thank you.
Thank you.
Thank you.