Rackspace launches $2.2 billion term loan at Libor plus 275-300 bps

By Sara Rosenberg

New York, Jan. 26 – Rackspace Technology Global Inc. launched on its lender call on Tuesday a $2.2 billion seven-year senior secured covenant-lite first-lien term loan that is talked at Libor plus 275 basis points to 300 bps with a 0.75% Libor floor and an original issue discount of 99.5, according to a market source.

The term loan has 101 soft call protection for six months and amortization of 1% per annum, the source said.

Expected term loan ratings are B1/B+.

Citigroup Global Markets Inc., Barclays, BMO Capital Markets, MUFG, J.P. Morgan Securities LLC, Goldman Sachs Bank USA, Mizuho, RBC Capital Markets, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., HSBC Securities (USA) Inc. and Apollo are the joint lead arrangers on the deal. Citi is the administrative agent.

Commitments are due at noon ET on Feb. 2, the source added.

Proceeds will be used with $650 million of other secured debt to repay all borrowings outstanding under the company’s existing term loan B and to pay related fees and expenses.

Closing is expected on Feb. 5.

Rackspace is a Windcrest, Tex.-based end-to-end multicloud technology services company.

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