Rackspace readies launch of credit facility for Thursday morning

By Sara Rosenberg

New York, Oct. 7 – Rackspace Hosting Inc. scheduled a bank meeting for 10:30 a.m. ET in New York on Thursday to launch its proposed senior secured credit facility, according to a market source.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Barclays, RBC Capital Markets and Credit Suisse Securities (USA) LLC are the leads on the debt.

Based on filings with the Securities and Exchange Commission, the credit facility is expected to be sized at $2,225,000,000, split between a $225 million revolver and a $2 billion term loan.

Proceeds will be used to help fund the buyout of the company by Apollo Global Management LLC for $32.00 per share in cash. The transaction has a total value of $4.3 billion, which includes the assumption of $43 million of net cash.

Also, funds managed by Searchlight Capital Partners LP will make a strategic equity investment in the acquired company.

Along with the credit facility, $1.2 billion in senior unsecured notes and up to $1,707,000,000 in equity are expected to be used for the buyout.

Backing the notes is a commitment for a $1.2 billion senior unsecured bridge facility.

Closing is targeted for the fourth quarter, subject to the conclusion of the applicable antitrust waiting periods in the United States, the European Union and Israel, stockholder approval and other customary conditions.

Rackspace is a San Antonio-based managed cloud company.

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