Super Micro Computer (NASDAQ: SMCI) announced an offering of 75 million depositary shares of 7.00% Series A Mandatory Convertible Preferred Stock, with each depositary share representing a 1/20th interest in the preferred stock.

Each share of preferred stock carries a $1,000 liquidation preference, making each depositary share worth $50. The preferred stock will pay cumulative dividends at 7.00% annually when declared by the board of directors. Dividend payments can be made in cash, common stock, or a combination of both on March 1, June 1, September 1, and December 1 of each year, starting September 1, 2026, and ending June 1, 2029.

The preferred stock will automatically convert to common stock on June 1, 2029, unless converted earlier. Each preferred share will convert into between 30.3040 and 36.3640 common shares, based on the average volume-weighted average price of common stock over a 20-day trading period ending near the conversion date.

Super Micro Computer is simultaneously conducting a separate public offering of 45.4 million common shares. The company also entered into an equity distribution agreement allowing sales of up to $1.25 billion in common stock through at-the-market transactions.

The company stated it intends to use proceeds from these offerings to purchase components for approximately $39 billion in orders for advanced AI servers from more than 20 customers. The orders were received in recent weeks and are planned for fulfillment in future quarters. Proceeds may also be used for general corporate purposes including debt repayment, working capital additions, and capital expenditures.

Computershare Trust Company will serve as the depositary for the preferred stock shares under a deposit agreement.