Galaxy Helios II’s $3.507bn notes: cash, reserves and completion support

Galaxy Helios II’s July 28 note issue carried $3.507 billion of principal, but its 99.5% issue price implied $3.489465 billion of gross issue cash before fees. The $17.535 million discount is the first adjustment in understanding how the financing supports construction. The next is the money reserved for debt service and the uses permitted for the remaining proceeds.

The completed offering was issued by Galaxy Helios Data Centers II LLC, an indirect wholly owned Galaxy Digital subsidiary. Net proceeds were intended to finance part of two buildings containing eight data halls in Dickens County, Texas, and to fund debt-service reserves. The project combined 400 megawatts of utility capacity with 260 megawatts of critical IT capacity. Those capacity measures describe different parts of the same project.

A reserve requirement that changes with the project#

The indenture’s reserve definition starts its construction-period calculation with $285,052,395.04. That figure already reflects estimated construction-period note interest less expected project-company net operating income and estimated earnings on deposited funds.

The calculation then subtracts note interest already paid and adds the next scheduled interest payment and the installment due at the amortization commencement date. After the construction period, the requirement becomes the next scheduled interest payment plus the next installment. An investment-grade rating activates a proviso reducing specified forward interest and installment components to 50%.

The $285.052 million figure therefore cannot be treated as a fixed cash balance and deducted from issue proceeds to produce an exact construction allowance. Section 4.23 also permits the reserve to be funded through combinations including cash, government securities, equity proceeds, letters of credit and additional debt. A reserve supported by a letter of credit has a different cash effect from the same requirement funded entirely with issue proceeds.

The proceeds account has several jobs#

Section 4.23 places initial net proceeds into the Notes Proceeds Account, except amounts used for the reserve and note payments. Before all data halls reach their lease commencement dates, permitted uses include construction and other project expenses, debt service, operating expenses and specified permitted restricted payments. The account consequently supports more than payments to builders.

Reserve-account amounts may be used only for note debt service, with excess funds eligible for transfer under the agreement. Project accounts are subject to collateral arrangements and springing control, while the document also preserves exceptions for other cash and pass-through payments. These provisions allocate cash uses without establishing that every dollar held by the project companies is permanently trapped.

The budget denominator is similarly broad. The indenture’s defined full construction budget includes property acquisition and closing costs, construction-period debt interest, the reserve requirement and financing fees and expenses. The selected public terms do not state its numerical total. They support a bridge from closed principal to issue cash and permitted uses, but do not establish a percentage of the complete project budget financed by the notes.

Completion support remains a separate funding obligation#

Galaxy Digital Holdings LP provided an uncapped completion guarantee. The July filing describes additional funds becoming necessary when note proceeds and other available funds, including prior equity contributions, are insufficient to bring each required CoreWeave phase to its rent-commencement conditions. It is a contingent source of completion funding, without a disclosed fixed amount to add to the issue cash.

Galaxy’s June-quarter report subsequently warned that sufficient funds to meet that guarantee were not assured if construction exceeded anticipated costs. The commitment therefore leaves the guarantor’s capacity and the remaining project budget relevant to underwriting.

Altss’s Q3 infrastructure-financing analysis examines obligations activated by delivery and tenant default. Helios II adds a closed financing whose construction support depends on issue cash, reserve instruments and permitted spending, alongside a separate completion-funding backstop. An investor can establish those funding routes from the documents; sizing the residual equity need still requires the numerical budget, actual reserve support and transaction costs.