The Recent Super Micro Computer (SMCI) Debt Covenant Change Hints At Further Annual Report Filing Delays

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Super Micro Computer (SMCI), a retailer of high-performance servers and liquid-cooled AI racks, has effectively transitioned from a darling of the market and an emblem of the ongoing AI gold rush to a veritable pariah, all in a matter of just a few short weeks. Yet, the company’s travails might still have further room to grow, if its latest debt covenant change is anything to go by.

To wit, Super Micro Computer has now announced three major changes to its existing loan agreement with Cathay Bank:

1. An extension in the date by which the audited financial statements for FY 2024 have to be delivered from the 28th of October to the 31st of December, 2024.
2. An extension in the date by which the income statement and the balance sheet for the quarter ending on the 30th of September have to be furnished from the 29th of November to the 31st of December, 2024.
3. Super Micro Computer must now maintain a minimum unrestricted cash balance of $150 million “at all times.”

Back in August, Super Micro Computer delayed the filing of its annual report for the fiscal year that ended on the 30th of June, 2024, in the aftermath of a hard-hitting report from Hindenburg Research, which detailed instances of alleged accounting fraud and corporate governance malfeasance. The delay was presumably in a bid to undertake a comprehensive internal review.

Bear in mind that under the prevailing statutory requirements, Super…