Data center developer DuPont Fabros Technology (DFT) said today that it has halted construction at data center projects in New Jersey and Virginia after it failed to arrange additional financing. The company said talks to arrange $150 million in mezzanine debt recently ended after the lender revised its terms.
"After a careful evaluation of our development initiatives we believe this is the prudent course of action at this time," said Hossein Fateh, President and Chief Executive Officer of DuPont Fabros. "Although we continue to pursue financing arrangements acceptable to the Company, we are confident that our existing sources of cash will satisfy all construction-related obligations that have been committed to date at ACC5, NJ1 and SC1 in Santa Clara, California."
DuPont Fabros said Oct. 28 that it was halting work on its planned $270 million data center in Santa Clara, saying the credit crunch had limited the size of a new loan to $100 million. At the time, the company said it planned to will use the $100 million to continue construction on new data centers Piscataway, New Jersey and its ACC5 facility in Ashburn, Virginia.
On Nov. 6, the company said it would suspend its dividend for the fourth quarter and was negotiating a $150 million loan with a large pension fund. At the time, company officials said they would suspend construction if the loans fell through. Shares of DuPont Fabros fell sharply following the announcement.
Shares of DuPont Fabros rose sharply in the final 15 minutes of trading on Friday, jumping from $1.85 to close at $2.41. In early trading Monday, DFT fell 48 cents to $1.93 a share in trading on the New York Stock Exchange.
The company said this morning it expects to be able to pay dividends in 2009 from cash generated by its existing data centers, most of which are fully leased. CFO Mark Wetzel said DuPont Fabros is "working to satisfy the conditions that would enable us to extend the term of the debt obligation that is due at the end of 2009 as we seek additional financing for the company."