Rackspace to sell $550 million seven-year secured notes on Tuesday

By Paul A. Harris

Portland, Ore., Feb. 2 – Rackspace Technology Global Inc. plans to price a $550 million offering of seven-year senior secured notes (expected ratings B1/B+) in a Tuesday drive-by trailing a mid-morning conference call with investors, according to a syndicate source.

Citigroup Global Markets Inc. is the lead bookrunner. Barclays, BMO Capital Markets Corp., MUFG, J.P. Morgan Securities LLC, Goldman Sachs & Co. LLC, Mizuho Securities USA Inc., RBC Capital Markets LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and HSBC Securities (USA) Inc. are the joint bookrunners. Apollo Global Securities LLC is the co-manager.

The Rule 144A and Regulation S for life notes come with three years of call protection and feature a three-year 40% equity clawback at par plus the coupon.

The Windcrest, Tex.-based end-to-end multicloud technology services provider plans to use the proceeds plus a $2.3 billion first-lien term loan to pay off its existing term loan B.

Tranche sizes of the refinancing changed prior to the launch of the notes when Rackspace shifted $100 million of proceeds to a new term loan from the notes offering, increasing the loan to $2.3 billion from $2.2 billion and decreasing the notes to $550 million from the previously planned $650 million, according to market sources.

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