Is Equinix (EQIX) ready to start building again? The colocation and interconnection specialist announced plans to issue $250 million in convertible debt to "fund the development of expansion opportunities." Shares of Equinix fell $4.15 to close at $71.76, a decline of 5.5 percent.
Equinix also said it was taking steps to address concerns about potential dilution in its common shares in the event the subordinated notes are converted into common stock. The company said it was using a hedging strategy known as a "capped call transaction" with underwriters to reduce potential dilution upon conversion of the notes. Citi, J.P. Morgan Securities Inc. and Goldman, Sachs & Co. are acting as joint book-running managers for the offering.
In the company's first quarter conference call, Equinix executives said they are continuing plans to build out expansion space in the New York, Los Angeles and Chicago markets, where the company is feeling capacity constraints. Equinix currently has no new construction underway in the Silicon Valley and northern Virginia markets.