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Digital Core REIT tenant Cyxtera close to deal with lenders for funding

Bloomberg
Bloomberg • 2 min read
Digital Core REIT tenant Cyxtera close to deal with lenders for funding
Absent a buyer, Cyxtera could seek Chapter 11 protection
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Cyxtera Technologies Inc. is nearing a restructuring support agreement that contains bridge financing from lenders as the struggling data-center operator pursues a potential sale and fundraising to address debt issues, according to people familiar with the situation.

The firm skipped a loan interest payment last week as it continued talks on how to tackle nearly US$870 million of debt due next year, Bloomberg reported. The company is now close to striking a deal with lenders for additional financing to give itself more bandwidth to pursue a dual-track process, including a sale, said the people who requested anonymity discussing private matters.

Absent a buyer, Cyxtera could seek Chapter 11 protection, in which term loan lenders could take equity in the restructured company, they added. Reorg reported earlier on certain elements of the potential restructuring support agreement.

Cyxtera didn’t immediately respond to written requests for comment.

Cyxtera’s backers include hedge fund Starboard Value as well as private equity firms Medina Capital and BC Partners. A representative for BC Partners declined to comment, while Starboard and Medina didn’t respond to requests for comment.

Cyxtera’s term loan due May 2024 is quoted at around 74.8 US cents on the dollar, a decline from as high as 90.125 US cents in early March, according to data compiled by Bloomberg. The company also has a revolving credit line due April 2024, public filings show.

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Cyxtera is working with AlixPartners and Guggenheim Partners for debt advice, while the group of lenders retained Houlihan Lokey Inc. and Gibson, Dunn & Crutcher, Bloomberg reported earlier.

Cyxtera was formed in 2017 after CenturyLink’s data center and co-location business was combined with Medina Capital’s security and data analytics businesses. In 2021, the Coral Gables, Florida-based company merged with a blank-check firm backed by shareholder Starboard Value in a deal valuing the combined company at about US$3.4 billion on an enterprise basis.

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