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Assets Held for Sale | 9 Months Ended
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Feb. 29, 2024
Discontinued Operations and Disposal Groups [Abstract] |
Assets Held for Sale | Assets Held for Sale During the third quarter of fiscal 2024, the Company’s board approved plans to sell its Garden City facility. As such, the Company determined that the Garden City datacenter hosting facility met the “held for sale” classification as of February 29, 2024. On March 14, 2024, the Company entered into an agreement to sell the facility for a total potential cash consideration of $87.3 million (the “Cash Purchase Price”). As part of the agreement, the Company can earn additional consideration if it is able to assist the buyer in achieving regulatory approval for additional megawatt energization for the Garden City datacenter hosting facility within 120 days after the transaction closing (the “Contingent Amount”). As such, the associated property, equipment, and lease assets and liabilities have been classified as “held for sale” and the Company recorded a charge of $21.7 million in loss on held for sale classification on its condensed consolidated statements of operations for the three and nine months ended February 29, 2024 to record the asset group at its fair value less costs to sell. The Company has determined that this disposal did not qualify as a discontinued operation as the sale of the Garden City Facility was determined to not be a strategic shift as it does not represent a change in services provided or a change to the Company’s customer base. Assets and liabilities held for sale as of February 29, 2024 are as follows:
Assets held for sale |
Property and equipment, net | $ | 57,260 |
Finance lease right of use assets | 8,109 |
Total assets held for sale | $ | 65,369 |
Liabilities held for sale |
Current portion of finance lease liability | $ | 3,657 |
Long-term portion of finance lease liability | 4,622 |
Total liabilities held for sale | $ | 8,279 |
The Company has calculated the loss on assets held for sale as of February 29, 2024 based on the purchase price agreed upon with Marathon on March 14, 2024. The Company notes that the purchase agreement contains a $34.0 million “holdover” amount that is conditionally owed to the Company if additional energy capacity at the facility receives regulatory approval within 120 days of closing. For purposes of applying the fair value as of February 29, 2024, the Company did not consider achievement of this approval probable, and therefore has not considered any of the holdover amount when calculating the implied purchase price and fair value. Further, the Company notes that Marathon will release approximately $10.0 million of deferred revenue held by the Company in conjunction with the closing of the agreement. The Company also notes that Marathon will receive all assets related to the facility but is only assuming the ground lease liabilities, and the remaining $5.1 million of equipment lease liabilities are the responsibility of the Company to pay off at closing. Accordingly, the Company has excluded these lease liabilities in its calculation of fair value below. See below for the Company’s calculation of the implied transaction price and fair value and the resulting loss on the classification of assets as held for sale (in thousands):
Assets held for sale |
Maximum Purchase Price | $ | 87,329 |
Less: Conditional Amount | (34,000) |
Cash Consideration | 53,329 |
Lease Liabilities Assumed | 3,207 |
Deferred Revenue Released | 9,971 |
Implied Fair Value | 66,507 |
Less: Estimated Costs to Sell | (1,200) |
Total fair value less costs to sell | $ | 65,307 |
Loss calculation |
Carrying value of assets held for sale | $ | 87,030 |
Less: Fair value less costs to sell | 65,307 |
Loss on classification of held for sale | $ | 21,723 |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//360/tableOfContent + Details
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