What is the primary purpose of the new debt issuance?

The primary purpose of issuing the $1.25 billion in new senior notes was to redeem Equinix's outstanding 7.00% senior notes due 2021. This refinancing aims to lower the company's overall interest expense by replacing higher-cost debt with lower-cost debt.

What is the financial impact of redeeming the old notes?

Equinix expects to record a loss on debt extinguishment of approximately $106 million in the fourth quarter of 2014. This loss includes the make-whole payment, write-off of unamortized debt issuance costs, and transaction fees. However, the company believes the overall transaction will be positive in terms of net present value.

How will the remaining proceeds from the debt issuance be used?

Any proceeds not used for the redemption of the 2021 notes will be used for general corporate purposes. This may include capital expenditures, distributions to stockholders related to the proposed REIT conversion, working capital, and potential acquisitions or strategic transactions.

What are the terms and seniority of the new notes?

Equinix issued $750 million of 5.375% Senior Notes due 2022 and $500 million of 5.750% Senior Notes due 2025. These notes are general unsecured senior obligations of Equinix and rank equally with the company's other unsecured senior indebtedness. They effectively rank junior to any secured indebtedness and to the liabilities of Equinix's subsidiaries.

EQIX 8-K: Material Agreements

Summary

Equinix, Inc. (EQIX) filed an 8-K on November 20, 2014, detailing a significant debt offering and refinancing transaction. The company successfully issued and sold $750 million in 5.375% Senior Notes due 2022 and $500 million in 5.750% Senior Notes due 2025, totaling $1.25 billion in aggregate principal amount. These new notes were issued under an effective registration statement and will mature in 2022 and 2025, respectively, with interest payable semi-annually. The primary purpose of this debt issuance was to fund the redemption of approximately $846 million of the company's outstanding 7.00% senior notes due 2021. This move, expected to be completed in December 2014, aims to reduce the company's overall interest expense and potentially improve its cost of capital. Despite an anticipated loss on debt extinguishment of approximately $106 million in Q4 2014, Equinix expects this refinancing to be net present value positive. The net proceeds are also allocated for general corporate purposes, including capital expenditures and potential strategic transactions, notably in light of the company's proposed conversion to a Real Estate Investment Trust (REIT).

Key Highlights

1Equinix issued $1.25 billion in new senior notes: $750 million of 5.375% notes due 2022 and $500 million of 5.750% notes due 2025.
2The primary use of proceeds was to redeem $846 million of higher-coupon 7.00% senior notes due 2021.
3This refinancing is expected to reduce Equinix's overall interest expense.
4The company anticipates a loss on debt extinguishment of approximately $106 million in Q4 2014, but the transaction is projected to be net present value positive.
5Proceeds will also support general corporate purposes, including capital expenditures and potential acquisitions.
6The debt issuance is relevant to Equinix's ongoing process of converting to a Real Estate Investment Trust (REIT).
7The new notes are general unsecured senior obligations, ranking equally with other unsecured senior indebtedness and junior to secured debt.

EQUINIX INC 8-K Report, Material Agreement (Nov 20, 2014)

Summary

Key Highlights

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