Assets Held for Sale

9 Months Ended

Feb. 29, 2024

Discontinued Operations and Disposal Groups [Abstract]

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