Rackspace finalizes $2.1 billion term loan B at Libor plus 300 bps

By Sara Rosenberg

New York, June 9 – Rackspace Hosting Inc. firmed pricing on its $2,095,000,000 senior secured covenant-light term loan B due Nov. 3, 2023 at Libor plus 300 basis points, the low end of the Libor plus 300 bps to 325 bps talk, according to a market source.

The term loan still has a 1% Libor floor, a par issue, 101 soft call protection for six months and amortization of 1% per annum.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Barclays, RBC Capital Markets LLC and Credit Suisse Securities (USA) LLC are the joint lead arrangers on the deal. Apollo is a co-manager.

Proceeds will be used to reprice an existing term loan B down from Libor plus 350 bps with a 1% Libor floor and for general corporate purposes. Assuming the TriCore acquisition closes, a portion of the term loan B is intended to be used together with balance sheet cash to finance the acquisition and pay related fees and expenses.

Closing is expected on June 21.

Rackspace is a San Antonio-based managed cloud company.

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