Global data center service provider
) recently commenced a public offering of senior notes worth $1.5
billion in two parts. Management stated that this is an
enhancement of the previously announced $1.0 billion offering.
Equinix filed for the registration with the U.S. Securities and
J.P. Morgan Chase & Co.
), BofA Merrill Lynch and Deutsche Bank Securities are acting as
administrative agents for the purpose, along with certain other
lenders. The offer will cease on Mar 5.
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The first part of the notes offering will raise $500.0 million,
carrying an interest rate of 4.875%. The notes will mature on Apr
1, 2020. The second part of the senior notes offering worth $1.0
billion carries an interest rate of 5.375%. These notes will
mature on Apr 1, 2023. The interest will be rewarded
The raised amount (after deducting issue-related expenses) will
enable Equinix to increase fund availability and finance its
continuing working capital requirements, capital expenditure,
facilitate the repayment of its 8.125% convertible subordinated
notes due in 2018, and also fund the procedure for REIT (Real
Estate & Investment Trust) conversion and potential
Equinix already has a senior notes balance of $1.5 billion, which
will go up another $1.5 billion after this issue. However, the
repayment of convertible notes will bring down the total
Equinix exited fourth quarter 2012 with $418.7 million in cash
and cash equivalents, up from $404.5 million reported in the
previous quarter. It bears a total debt (loans payable, senior
notes plus convertible debt) of $2.45 billion, down from $2.70
billion in the previous quarter. This indicates regular repayment
of debts, which could be pretty attractive for the lenders.
Though Equinix' future growth prospects and REIT conversion is
encouraging, high debt burden, European exposure and competitive
threats from the likes of AT&T Inc. and Verizon Inc.
keep us concerned.
Currently, Equinix has a Zacks Rank #3 (Hold).