Equinix to Sell $1.5 Billion in Notes to Fund Construction, Acquisitions
March 1st, 2013 By: Rich Miller
Colocation provider Equinix plans to sell up to $1.5 billion in senior notes, and will use some of the money to build new data centers and fund acquisitions, the company said Thursday. The offering shows that the data center industry’s strongest players continue to use their financial strength to enter new markets and boost their competitive position.
Equinix (EQIX) will also use some of the money in its plan to convert to a real estate investment trust (REIT), a move that has boosted interest from investors but would involve a substantial cash payment to shareholders of at least $700 million.
The company plans two offerings: a sale of $1 billion in senior notes that mature in 2023 and pay 5.375 percent interest, and $500 million in notes due in 2020 pay 4.875 percent. Part of the proceeds will be used to reduce Equinix’s interest costs by paying off existing notes that pay 8.125 percent. Equinix said the remainder will be used for capital expenditures – which in the colocation business, means data center construction and maintenance – and to fund potential acquisitions.
The company said it does not currently have any deals pending deals. But in 2012 Equinix was an aggressive acquirer, boosting its global expansion with three deals, including the acquisition of Frankfurt data hub AncoTel, Shanghai provider AsiaTone and a data center in Dubai.
In the company’s recent earnings call, CEO Steve Smith said Equinix intends to “expand the global reach and scale of Platform Equinix both organically and through acquisitions.”
J.P. Morgan, Barclays, Citigroup, BofA Merrill Lynch and Deutsche Bank Securities are acting as joint book-running managers for the offering, and Evercore Partners, Goldman, Sachs & Co., HSBC, RBC Capital Markets and UBS Investment Bank.