Summary
Equinix, Inc. (EQIX) filed an 8-K on November 25, 2014, detailing the completion of a previously announced special distribution. The company issued approximately 1.48 million shares of common stock and paid out $83.3 million in cash, totaling $416.0 million or $7.57 per share. This distribution is intended to fully distribute Equinix's accumulated earnings and profits prior to 2015, a critical step for its planned conversion to a Real Estate Investment Trust (REIT) on January 1, 2015. The filing also notes an adjustment to the conversion rate of its 4.75% Convertible Subordinated Notes due 2016, impacting the number of shares issuable upon conversion and lowering the effective conversion price.
Key Highlights
- 1Equinix completed a special distribution of $416.0 million ($7.57 per share) consisting of cash and common stock.
- 2The special distribution is designed to fully distribute pre-2015 accumulated earnings and profits in preparation for a REIT conversion.
- 3Equinix plans to convert to a REIT effective January 1, 2015.
- 4The conversion rate of the 4.75% Convertible Subordinated Notes due 2016 has been adjusted due to the special distribution.
- 5The conversion price for the 2016 Convertible Notes has decreased from approximately $84.32 to $81.48 per share.
- 6The company acknowledges significant complexities and uncertainties surrounding the REIT conversion, including obtaining an IRS private letter ruling and ensuring ongoing REIT qualification.
- 7The REIT structure may limit Equinix's ability to make certain investments, particularly in taxable REIT subsidiaries or non-qualifying assets.