SHOCKING LOAN BLUNDER: CoreWeave’s $7.6BN Debt on the Edge of DISASTER!
Cloud Computing’s LATEST IGNORED Red Flags! 🚨 CoreWeave, a major player in the cloud computing game aiming for a jaw-dropping $32 billion IPO, just dropped a bombshell! They’re in BIG TROUBLE for violating critical terms of a massive $7.6 billion loan last year—sparking a series of alarming “technical defaults” that have investors sweating bullets.
Could This Be the End? 💥 This New Jersey-based company, which pushes computing power to the AI frontier, came clean about having to beg its largest lender, Blackstone, to amend loan terms and “waive” these defaults just last December. Yes, you heard that right—beg!
NO MISSING PAYMENTS? But RED FLAGS are FLYING! 🚫 Though they haven’t skipped a single payment, CoreWeave stumbled hard with serious missteps while using the funds to expand into Europe—completely ignoring loan conditions that only allowed US-sanctioned collateral. Investors are waking up to a potential financial fog!
When Loans Go Wrong! 🏦 Technical defaults are a lender’s worst nightmare. It’s not just about late payments; this breach could trigger FULL repayment—yikes! Thankfully, if borrowers show good faith, lenders sometimes let defaults slide. But is CoreWeave really acting in good faith?
IPO D-Day Approaches! 📉 As CoreWeave hits the road seeking investors just before its IPO pricing—set for FRIDAY—the stakes couldn’t be higher. They’re aiming to pull in $2.7 billion, but investors are now questioning if the company can withstand INTENSE scrutiny over its enormous debt pile, murky financial waters, and entanglement with Nvidia, the chip overlord.
A Hedge Fund Manager’s Nightmare! 😱 “This is a horrific light on CoreWeave’s internal controls,” one hedge fund manager exclaimed, pointing out how blatantly obvious these issues were. Meanwhile, another investor downplayed the debacle, calling it “a dumb oversight.”
Internal Chaos? There’s More! 🔥 CoreWeave has also admitted to potential investors that there are “material weaknesses” in its internal financial controls! After ditching RSM as their auditor for Deloitte last June, the alarm bells are ringing!
From Cryptos to AI! A Bumpy Ride! 🎢 Founded in 2017 for mining cryptocurrencies, they flipped the script into the AI realm, hoarding Nvidia GPUs—the hottest chips in the game! But danger lurks: Nvidia is not only their biggest supplier but also a major customer and investor. Microsoft accounts for a whopping 62% of CoreWeave’s revenue—talk about putting all your eggs in ONE basket!
$7.6BN Debt Drama! 💸 Originating from a consortium led by Blackstone and Magnetar Capital, CoreWeave’s loan is heavy as lead. They’ve drawn $4.3 billion so far! Pledging those precious GPUs as collateral, they’re treading a fine line, especially since lenders’ covenants are as strict as they come.
Disaster Unfolding? 📉 CoreWeave’s slip-up involved diverting cash to overseas ventures in the UK, Spain, and Sweden, leading to a grossly inflated GPU collateral claim! They also failed to notify lenders of their defaults within the required three-day window—another ticking time bomb!
Blackstone to the Rescue? 🚨 In a surprising twist, insiders revealed Blackstone didn’t charge a dime for the amendments—acknowledging it was just an administrative hiccup. Thankfully, they’ve shelled out an additional $500 million to keep CoreWeave afloat.
UPCOMING CRISIS? Don’t Miss It! ⚠️ With nearly $7.5 billion due by year-end, CoreWeave faces monstrous repayments starting next month. They plan to use over $1 billion from their IPO proceeds to tackle a separate $1 billion bridge loan.
Could CoreWeave’s ascent to the clouds turn into a CRASH LANDING? Stay tuned as this nail-biter saga unfolds!
photo credit: www.ft.com
