Terremark Worldwide (TMRK) is planning to borrow $400 million through a private debt placement, the company said today. The company will offer senior secured notes due to institutional buyers, and plans to use the funds to repay its existing $254 million senior credit facility, $4 million in convertible notes. The remainder will be available to support Terremark's growth, including "capital investments to build out facilities and acquisitions of complementary businesses."
The financing could help Terremark jump-start its data center plans in Santa Clara, California. The company recently decided to delay construction in Santa Clara so it could focus its development budget on its booming business at its data fortress in Virginia, the NAP of the Capital Region. The company offered no specifics on how it might use the new additional funds in its expansion plans. But in a recent conference call with analysts, Terremark CEO Manuel Medina said the move to delay construction in Santa Clara was driven by capital conservation.
"We basically are ready to go," Medina said of the Santa Clara project. "We can start shortly after funding, if financing is available. We prioritized and broke ground on the second part (of Culpeper). That puts Santa Clara on hold. The optimal way to finance it will be debt. We're seeing a thaw of the debt markets and we're seeing a significant amount of interest and rates coming down and we're seeing the high yield market opening up. That's what we will be looking at doing."
The notes will bear interest at a rate to be determined at pricing and will be guaranteed on a senior secured basis by Terremark’s domestic subsidiaries. The notes and guarantees will be secured by first priority liens on substantially all of the assets of Terremark and its domestic subsidiaries.