Rackspace Hosting sets price talk on $2.1 billion term loan B

By Paul A. Harris

Portland, Ore., June 1 – Rackspace Hosting Inc. set price talk for a $2,095,000,000 senior secured term loan B due Nov. 3, 2023 (Ba2/BB+/BB+), according to a market source.

Talk is Libor plus 300 to 325 basis points atop a 1% Libor floor at par, with 1% annual amortization and 101 soft call for six months from closing.

The commitment deadline is 5 p.m. ET June 7 for existing lenders, 5 p.m. ET on June 8 for new lenders. The deal is expected to close on June 21.

Citigroup is the left lead arranger and administrative agent. Deutsche Bank, Barclays, RBC and Credit Suisse are joint lead arrangers. Apollo is the co-manager.

The San Antonio-based managed cloud company plans to use the proceeds to reprice the existing term loan, which also matures on Nov. 3, 2023, as well as for general corporate purposes. Assuming that the TriCore acquisition closes, proceeds plus cash on the balance sheet will be used to finance the acquisition.

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