8-KOther Events

DIGITAL REALTY TRUST, INC. 8-K Report, Corporate Update (Aug 29, 2017)

Filed August 29, 2017For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

Digital Realty Trust (DLR) announced on August 29, 2017, a commitment letter for a $104 million senior secured term loan. This loan is contingent upon the successful closing of the previously announced merger with DuPont Fabros Technology, Inc. (DFT). The loan will be borrowed by Quill Equity LLC, an indirect subsidiary of DFT, and will mature on March 1, 2023. This financing is a crucial step in funding the acquisition and signifies the company's progress in securing necessary capital for the transaction. The term loan will be secured by a datacenter property in Ashburn, Virginia, and will be guaranteed by Digital Realty Trust and its operating partnership. Covenants within the loan agreement will impose restrictions on Digital Realty's future activities, including limitations on investments, mergers, and distributions to stockholders, with exceptions for maintaining REIT status. Investors should note that the loan terms also include provisions for default and acceleration, which are standard for secured debt but highlight the importance of meeting loan obligations.

Key Highlights

  • 1Digital Realty Trust, Inc. has secured a commitment letter for a $104 million senior secured term loan.
  • 2The term loan is directly tied to the completion of the merger with DuPont Fabros Technology, Inc. (DFT).
  • 3The borrower of the term loan will be Quill Equity LLC, an indirect subsidiary of DFT.
  • 4The loan has a maturity date of March 1, 2023, and is secured by a datacenter in Ashburn, Virginia.
  • 5Guarantees for the loan will be provided by Digital Realty Trust and its operating partnership.
  • 6Loan covenants will restrict certain company actions, including investments, mergers, and distributions, with exceptions for REIT compliance.
  • 7The Commitment Letter replaces a prior mortgage loan commitment related to the DFT merger financing.

Frequently Asked Questions

The $104 million senior secured term loan is intended to provide financing for Digital Realty Trust in connection with the closing of its proposed merger with DuPont Fabros Technology, Inc. (DFT).

The borrower will be Quill Equity LLC, an indirect subsidiary of DuPont Fabros Technology, Inc. The commitment letter was entered into by Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Bank of America, N.A.

The loan matures on March 1, 2023, and will be secured by a deed of trust on a datacenter owned by Quill in Ashburn, Virginia. It will be guaranteed by Digital Realty Trust, Inc. and its operating partnership. The interest rate will be a floating rate or base rate plus a margin based on Digital Realty's credit rating.

The loan documents are anticipated to include restrictive covenants that limit Digital Realty's ability to make certain investments, merge with other companies, and restrict distributions to stockholders (except as necessary to maintain REIT status and avoid taxes) after an event of default.