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Super Micro Computer (SMCI) has announced significant amendments to its loan agreement, extending deadlines for its financial reports amid ongoing scrutiny over alleged governance issues. With the Nasdaq compliance deadline approaching, SMCI faces growing pressure to resolve reporting delays or risk disciplinary action.
Super Micro Computer Faces Mounting Challenges as Debt Covenant Changes Signal Ongoing Uncertainty
SMCI a retailer specializing in high-performance servers and liquid-cooled AI racks, has seen its reputation shift dramatically in recent weeks—from a high-flying stock in the AI market to a company facing significant scrutiny and potential fallout. The latest changes to SMCI’s debt covenants indicate that the company’s challenges may be far from over.
In a recent announcement (via Wccftech), Super Micro Computer detailed three key amendments to its existing loan agreement with Cathay Bank:
- The deadline for submitting audited financial statements for FY 2024 has been extended from October 28 to December 31, 2024.
- The deadline for providing the income statement and balance sheet for the quarter ending September 30 has been pushed from November 29 to December 31, 2024.
- SMCI must maintain a minimum unrestricted cash balance of $150 million "at all times."
This series of extensions follows a delay in filing the company’s annual report for the fiscal year ending June 30, 2024. That delay came after a report by Hindenburg Research alleging instances of accounting fraud and governance issues within the company, prompting what appeared to be an internal review.
By law, Super Micro Computer was initially required to file its annual report by August 30. Still, ongoing delays have triggered a response from the Nasdaq exchange, warning of potential de-listing unless the company submits the report by November 16.
Auditor Departure Adds Pressure on Super Micro Computer as Nasdaq Compliance Deadline Approaches
This places SMCI in a precarious position. Under its loan agreement, the company must provide audited financial statements, a task complicated by the recent departure of its auditor, Ernst & Young (EY). The new extension deadline for audited statements—now set for the end of December—suggests a resolution to the company’s financial reporting issues remains elusive.
As the November 16 Nasdaq deadline looms, Super Micro Computer’s risk of breaching the exchange’s compliance grace period grows, increasing the likelihood of disciplinary action or de-listing if the company cannot meet its financial reporting obligations in time.
