Moody's: DB DataCenter unchanged on add-on

Moody's Investors Service is announcing that the B3 corporate family rating of DB DataCenter Holdings, Inc. is unchanged following its anticipated $25 million add-on to its existing seven-year first-lien term loan.

The proceeds will be used to partially pay down a fully drawn $50 million first-lien revolver, which is outstanding as a result of the purchase of its Bluffdale, Utah data center campus, Moody's said.

With expected proceeds from an additional $20 million equity sponsor investment and about $30 million from a data center sale and leaseback transaction, Moody's said it expects DataBank will have full revolver availability post this financing transaction and about $24 million of additional balance sheet cash.

This transaction strengthens liquidity and is mildly credit positive, the agency said.

The ratings reflect the company's small scale, high leverage and negative free cash flow resulting from high capital intensity, Moody's said.

These limiting factors are offset by DataBank's stable base of contracted recurring revenue, relatively high margins and robust product suite in the high-growth, niche market of communications infrastructure solutions, the agency said.

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