8-KSecurities & ListingOther EventsExhibits & Filings

DIGITAL REALTY TRUST, INC. 8-K Report, Unregistered Securities Sale (Jun 15, 2010)

Filed June 15, 2010For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

Digital Realty Trust, Inc. (DLR) filed an 8-K on June 15, 2010, to report on the exchange of a significant amount of its operating partnership's senior debentures for restricted shares of DLR common stock. Specifically, the company issued 1,160,950 restricted shares, along with an incentive fee and accrued interest, in exchange for $36.96 million in aggregate principal amount of 4.125% Exchangeable Senior Debentures due 2026 held by Hudson Bay Fund LP. This transaction was conducted under Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D, indicating it was a private placement exempt from public registration. As part of the agreement, DLR has committed to registering the resale of these shares for Hudson Bay, and a prospectus supplement related to this filing has been submitted to the SEC. This action aims to address potential dilution and manage outstanding debt obligations.

Key Highlights

  • 1DLR exchanged $36.96 million in aggregate principal of its 4.125% Exchangeable Senior Debentures due 2026 for restricted common stock.
  • 21,160,950 restricted shares of DLR common stock were issued in this exchange.
  • 3The transaction involved Hudson Bay Fund LP as the counterparty.
  • 4The issuance of shares was conducted as a private placement under Section 4(2) and Rule 506, exempt from registration.
  • 5DLR has agreed to register the resale of these issued shares for Hudson Bay.
  • 6A prospectus supplement and related prospectus were filed with the SEC to register the resale of these shares.
  • 7An opinion from Venable LLP regarding the validity of the shares was also filed.

Frequently Asked Questions

The primary purpose was to report the issuance of restricted common stock in exchange for a portion of the company's outstanding 4.125% Exchangeable Senior Debentures due 2026 held by Hudson Bay Fund LP. This is a debt-for-equity exchange.

No, the initial issuance of shares to Hudson Bay Fund LP was conducted as a private placement exempt from registration under Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D. However, DLR has agreed to file a prospectus supplement to register the resale of these shares.

This transaction reduces DLR's outstanding debt by $36.96 million principal amount of debentures. In return, it issues equity, which could potentially dilute existing shareholders. The company also paid an incentive fee and accrued interest as part of the exchange.

Hudson Bay Fund LP is a Delaware limited partnership that held a significant amount of DLR's 4.125% Exchangeable Senior Debentures. They participated in an exchange agreement with DLR to swap these debentures for restricted DLR common stock.