00:00You helped break this story with Ed, and I just want to get to grips of how creative this financing actually is.
00:06How often do we see SPVs being set up to buy GPUs and use them as underlying assets?
00:12Hi, thank you for having me.
00:14We've seen SPVs in the past before used for other type of assets.
00:18It's quite common in Wall Street to basically use assets as collateral instead of putting corporate debt.
00:23But it's becoming much more interesting and much more common to see tech giants basically do this type of deals because they don't want to put a lot of debt on the corporate balance sheet.
00:35So I think we're going to see more of these in the future.
00:38Carmen, it's been a busy couple of days chasing this one, right?
00:42So the structure is $20 billion.
00:44Most of it is debt, and there is some equity in there.
00:48And this morning, NVIDIA's CEO, Jensen Wang, went on another network and in an interview essentially confirmed NVIDIA's participation.
00:59Just give us the rest of the details that we put in that story.
01:02Sure.
01:03So it will be at least $20 billion of capital basically to buy the chips that XAI will use for this data center in Memphis.
01:11And there's going to be like a variety of Wall Street investors in the dead.
01:15We know Apollo is in a diameter.
01:18We reported as well.
01:19The equity will have a number of investors as well, including Valor, who's leading the financing.
01:26But yeah, NVIDIA is invested in the equity, which is really interesting given that they're basically using that money to buy their own chips.
01:33Where do we go from here?
01:35I mean, it's really difficult because I feel there's a lot more reporting to be done.
01:38The piece of the mechanism that I'm trying to get my head around is that there's an SPV, and XAI rents and leases the chips, we think, over a five-year period.
01:48What do the investors get in return?
01:50Like, are they going to get a stake in XAI?
01:53Are they just being paid rent, basically?
01:56And then that covers their debt obligations?
01:58What do we know?
01:59Well, from what we know, they get the lease payments, which is how they can amortize the debt over time.
02:04So basically, you get monthly, quarterly payments for the financing.
02:10So you kind of pay down the debt that way.
02:12But the idea, from what we understand, is basically at the end of it, you still have the chips that have some value, right, after the five years.
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