Cyxtera discloses credit facility structure, price talk with launch

By Sara Rosenberg

New York, Feb. 28 – Cyxtera Technologies Inc. (Colorado Buyer Inc.) launched at its bank meeting on Tuesday a $1,275,000,000 credit facility, according to a market source.

The facility consists of a $150 million five-year revolver (Ba3/B+), an $815 million seven-year covenant-light first-lien term loan (Ba3/B+) and a $310 million eight-year covenant-light second-lien term loan (B3/CCC+), the source said.

Price talk on the first-lien term loan is Libor plus 350 basis points to 375 bps with a 1% Libor floor and an original issue discount of 99.5, and talk on the second-lien term loan is Libor plus 750 bps to 775 bps with a 1% Libor floor and a discount of 99.

Included in the first-lien term loan is 101 soft call protection for six months, and the second-lien term loan has hard call protection of 102 in year one and 101 in year two but is callable at 101 in the first year in the event U.S. tax code eliminates tax deductibility of interest for federal income tax, the source continued.

There is a ticking fee of 50% of the drawn spread from days 46 to 60 and the full spread plus the greater of Libor/floor thereafter.

Amortization on the first-lien term loan is 1% per annum.

The accordion is the greater of $250 million and 100% of last-12-months EBITDA shared between the first-lien term loan and the second-lien term loan, an amount equal to voluntary prepayments of the first-lien term loan and the second-lien term loan, with respect to the second-lien term loan, and commitment reductions under the revolver, and an unlimited amount subject to first-lien net leverage of no greater than 4.5 times, or with respect to the second-lien term loan, a secured net leverage ratio no greater than 5.8 times.

There is 50 bps MFN for 12 months which only applies to term loans larger than $75 million and with an outside maturity date less than two years after the latest maturity date.

Mandatory prepayments are 50% of excess cash flow with step-downs to 25% and 0% based on first-lien net leverage at 4 times and 3.5 times or secured net leverage ratios under the second-lien at 5.3 times and 4.8 times, respectively, and 100% of asset sale proceeds subject to reinvestment rights with step-downs to 50% and 0% based on first-lien net leverage of 4 times and 3.5 times, or secured net leverage ratios under the second-lien at 5.3 times and 4.8 times, respectively.

Citigroup Global Markets Inc., J.P. Morgan Securities LLC, Barclays, Credit Suisse Securities (USA) LLC, Jefferies Finance LLC, HSBC Securities (USA) Inc., Macquarie Capital (USA) Inc. and Citizens are the bookrunners on the deal, with Citi the left lead on the first-lien debt and JPMorgan the left lead on the second-lien debt.

Commitments are due at 5 p.m. ET on March 14, the source added.

Proceeds will be used to help fund the acquisition of 57 data centers from CenturyLink Inc. by a joint venture being formed by BC Partners and Medina Capital, along with Longview Asset Management, and combination of the data centers with Medina Capital’s security and data analytics portfolio.

The CenturyLink data centers are being purchased for $2.15 billion in cash, subject to offsets for capital lease obligations and various working capital and other adjustments.

Also, CenturyLink will receive a minority stake to be valued at $150 million in the consortium’s newly formed global secure infrastructure company.

Closing on the data centers acquisition is expected early in the second quarter, subject to regulatory approvals and other customary conditions.

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