Google Could Take Equity in TeraWulf's Kentucky Project If Anthropic Defaults on $19B Lease
Google must generally take over the lease for the first six years of support, and its obligation ends once Anthropic holds an investment-grade rating for three months; TeraWulf shares fell about 11%.
Google has agreed to backstop Anthropic's 20-year, $19 billion lease for 401 megawatts (MW) of AI capacity at TeraWulf's ($WULF) Kentucky campus, and could gain ownership of part of the project if Anthropic defaults. The terms were disclosed in an SEC filing on Nov. 4. TeraWulf shares were down 10.56% at $10.47 at 2:48 p.m. ET on Thursday as data center stocks fell broadly.
What was announced
| Item | Details |
|---|---|
| Credit support | Google LLC signed three credit support agreements on Nov. 4 backing Anthropic's leases with Raylan Data, the TeraWulf subsidiary that operates the project |
| Lease | 20 years, about $19 billion of contracted lease commitments, for about 401 MW of critical IT load at the Justified Data Campus in Hawesville, Kentucky; the lease was signed in July |
| Purpose | Google's support is tied to TeraWulf's planned debt financing for the project |
| Google's credit | Alphabet's senior unsecured debt is rated AA+ by S&P Global Ratings and Aa2 by Moody's |
| Construction | TeraWulf also signed a definitive engineering, procurement and construction agreement with Fluor Enterprises for three data center buildings, on a guaranteed maximum price basis |
| Deliveries | Phased ready-for-service completions are expected to start in late 2027 and run through the second quarter of 2028 |
How the backstop works
- If Anthropic defaults. If Anthropic misses rent or becomes insolvent, Google can step in as tenant and take over the lease.
- Termination fee for equity. Under certain conditions, Google can instead pay a termination fee and take an ownership stake in Raylan Data. The stake is in the project subsidiary, not in TeraWulf itself, and its size depends on the fee relative to total project cost, which includes land, infrastructure, equipment and financing. For example, a payment equal to 30% of total cost would give Google a 30% stake.
- Six-year restriction. For the first six years of Google's support, Google generally must take over the lease rather than terminate it. The exception applies if the Google TPU chips installed in the data halls can use less than half of the power allocated to the tenant.
- When support ends. Google's obligations end if Anthropic, or a parent or subsidiary, holds an investment-grade credit rating for at least three months.
- When support starts. Google's support for each of the three leased sections begins when the final data hall in that section is delivered.
What TeraWulf said
TeraWulf Chief Financial Officer Patrick Fleury said the credit support "strengthens the project's financing profile" and supports the company's ability to pursue long-term debt on competitive terms. The Fluor agreement builds on a limited notice to proceed announced in March, and the guaranteed maximum price will be set as engineering and procurement progress. For the original deal announcement and the Fluor contract, see our earlier TeraWulf report.
How the stock reacted
| Stock | Price | Change | Context |
|---|---|---|---|
| TeraWulf ($WULF) | $10.47 | -10.56% | Down from a $11.70 close on Wednesday; the low of $9.51 was about 18.7% below that close and matches its 52-week low |
| Applied Digital ($APLD) | $14.52 | -12.61% | |
| IREN ($IREN) | $18.78 | -13.50% | |
| CleanSpark ($CLSK) | $5.91 | -13.09% | |
| Cipher Digital ($CIFR) | $5.78 | -11.08% |
Prices are from Google Finance quotes at 2:48 p.m. ET and change by the minute. TeraWulf is about 65% below its 52-week high of $29.84. Reuters reported that TeraWulf shares fell about 3% in premarket trading on Wednesday amid a broader slide in AI data center stocks, as investors weighed possible tighter regulation after Democrats gained control of Congress. See our market recap.
What to watch
- Financing. Whether TeraWulf announces the size, lenders and pricing of the project debt that Google's support is meant to back.
- Earnings. TeraWulf's third-quarter results, which Barchart said are due Nov. 6.
- Deliveries. Whether the first data halls are delivered in late 2027 and the final ones by the second quarter of 2028.
- Credit rating. Whether Anthropic earns an investment-grade rating, which would end Google's obligations.
- Related coverage. See our reports on Oracle's New Mexico data center and Oracle and Tencent.
Sources: Lease, construction and timing details are from TeraWulf's Nov. 4 announcement and SEC filing, with backstop terms as reported by CoinDesk and Datastudios and the CFO comment and premarket move from Reuters. Share prices are from Google Finance quotes on Nov. 5, and items marked about are rounded or calculated from those quotes. This article is informational only and is not investment advice.
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