Summary
Equinix, Inc. (EQIX) announced on March 5, 2013, the successful issuance of $1.5 billion in aggregate principal amount of senior notes. This issuance comprises $500 million of 4.875% Senior Notes due 2020 and $1 billion of 5.375% Senior Notes due 2023. The primary purpose of this debt issuance is to redeem Equinix's outstanding 8.125% Senior Notes due 2018. Additionally, the net proceeds may be used for general corporate purposes, including capital expenditures, potential distributions related to its proposed REIT conversion, working capital, and strategic transactions. This refinancing activity is significant for investors as it aims to reduce Equinix's interest expense by replacing higher-coupon debt with lower-cost notes. The company has also entered into a Third Amendment to its Credit Agreement, effective February 27, 2013, which modifies the calculation of certain financial covenants, notably excluding transaction costs associated with the new debt issuance and the redemption of the old notes from EBITDA calculations. This amendment also postpones a step-down in the maximum permitted senior leverage ratio, providing some near-term financial flexibility.
Key Highlights
- 1Equinix issued $500 million in 4.875% Senior Notes due 2020 and $1 billion in 5.375% Senior Notes due 2023.
- 2The proceeds will be used to redeem the outstanding 8.125% Senior Notes due 2018, refinancing higher-cost debt.
- 3The new notes are general senior obligations of Equinix and are not guaranteed by its subsidiaries.
- 4The company entered into a Third Amendment to its Credit Agreement, modifying financial covenant calculations.
- 5The amendment excludes certain transaction costs from EBITDA and postpones a leverage ratio step-down.
- 6Restrictive covenants are included in the new note indentures, limiting additional indebtedness, restricted payments, and other activities.
- 7The new notes offer flexibility for early redemption under specific conditions, including using proceeds from equity offerings or at an 'applicable premium'.