Summary
Equinix, Inc. (EQIX) filed an 8-K on March 22, 2017, announcing the issuance of $1.25 billion in 5.375% Senior Notes due 2027. The net proceeds from this offering are earmarked to finance the previously announced acquisition of Verizon Communications Inc.'s colocation services business, which comprises 24 data center sites across the U.S., Brazil, and Colombia, as well as for related transaction costs and general corporate purposes. The Notes carry a fixed interest rate and mature in 10 years, with specific redemption provisions outlined, including a potential redemption at par if the Verizon acquisition is not completed by December 6, 2017. This debt issuance provides Equinix with significant capital to fund a major strategic acquisition, which is expected to expand its global footprint. Investors should note the notes are general unsecured senior obligations, ranking equally with other unsecured senior indebtedness, but effectively junior to secured debt and all subsidiary liabilities. The filing also details various restrictive covenants within the indenture that govern Equinix's future financial flexibility.
Key Highlights
- 1Equinix issued $1.25 billion in 5.375% Senior Notes due May 15, 2027.
- 2Proceeds will primarily fund the acquisition of Verizon's colocation business (24 data centers).
- 3The acquisition includes sites in the United States, Brazil, and Colombia.
- 4A condition for the notes is that if the Verizon acquisition is not completed by December 6, 2017, Equinix must redeem the notes at par.
- 5The notes bear a fixed interest rate of 5.375% per annum, payable semi-annually.
- 6The notes are general unsecured senior obligations of Equinix.
- 7The indenture includes covenants restricting additional indebtedness, restricted payments, and other financial actions.