S&P lowers Rackspace Technology Global

S&P said it downgraded its ratings for Rackspace Technology Global Inc. to SD, Selective Default, from CCC- and its first-lien debt and senior unsecured notes due in 2028 to D from CCC- and C, respectively.

In its earnings release, Rackspace said it bought back $171 million of unsecured notes in the open market at deep discounts. The company also announced on March 12, that it had finished a private debt restructuring transaction with its lenders and was planning to offer its other existing first-lien lenders the opportunity to participate in exchange transactions on the remaining $182.3 million in principal of the outstanding secured notes and the $592.3 million aggregate principal amount of the term loans through two public tender offers.

“We project these transactions will reduce pre-transaction gross debt by more than $600 million, add $275 million of additional cash to the balance sheet from new borrowings, and extend the maturities on the revolving credit facility out to May 2028 in exchange for new first-lien facilities issued by subsidiary Rackspace Finance Holdings, LLC,” S&P said in a press release.

The agency said it considers these transactions the equivalent of default.

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