8-KMaterial AgreementsFinancial Events

EQUINIX INC 8-K Report, Material Agreement (Oct 3, 2016)

Filed October 3, 2016For Securities:EQIX

Summary

Equinix Inc. (EQIX) has announced a material definitive agreement through its Japanese subsidiary, Equinix Japan K.K. (EJKK), entering into a Term Loan Agreement with The Bank of Tokyo-Mitsubishi UFJ, Ltd. This agreement provides EJKK with a term loan facility of up to JPY 47.5 billion (approximately USD 468.6 million). The primary purpose of this new financing is to repay an existing bridge loan that was utilized for the acquisition of Bit-isle, Inc. in December 2015 and to clear associated debt. This refinancing demonstrates Equinix's ongoing efforts to optimize its capital structure and manage acquisition-related debt effectively. Investors should note that Equinix, Inc. and its subsidiaries are providing guarantees for this new loan facility.

Key Highlights

  • 1Equinix Japan K.K. secured a JPY 47.5 billion (approx. USD 468.6 million) term loan.
  • 2The loan proceeds will be used to repay an existing bridge loan related to the Bit-isle acquisition.
  • 3The loan matures on October 29, 2021, with quarterly principal repayments of JPY 625.0 million (approx. USD 6.2 million).
  • 4Interest rate is based on Tokyo Interbank Offered Rate (TIBOR) plus a margin, initially 1.50%, potentially decreasing to 1.25% with an investment grade rating.
  • 5Equinix, Inc. and its subsidiaries are required to guarantee the obligations under the Term Loan Agreement.
  • 6The agreement includes customary covenants and financial covenants for EJKK, such as maintaining specific financial ratios starting FY2017.

Frequently Asked Questions

The primary use of the new JPY 47.5 billion term loan is to repay an existing bridge loan. This bridge loan was originally used to finance the acquisition of Bit-isle, Inc. in December 2015 and to settle Bit-isle's existing debt at the time of acquisition.

The loan has a maturity date of October 29, 2021. Principal repayment will occur in quarterly installments of JPY 625.0 million (approximately USD 6.2 million), with the remaining balance due on the maturity date.

The interest rate is structured as the Tokyo Interbank Offered Rate (TIBOR) for Japanese Yen, plus a margin. The initial margin is 1.50% per annum. This margin can decrease to 1.25% if Equinix obtains an investment grade rating from a major U.S. rating agency.

Yes, Equinix, Inc. and certain of its direct and indirect subsidiaries are required to guarantee the obligations of Equinix Japan K.K. (the borrower) under the Term Loan Agreement. This means Equinix Inc. is indirectly liable for the debt.