Equinix enters into $750m credit agreement
Equinix plans to use the net proceeds from the facilities for working capital, capital expenditures, acquisitions and other general corporate purposes.
Global interconnection and data center company Equinix Inc (NASDAQ:EQIX) on Wednesday entered into a Credit Agreement with a syndicate of financial institutions, as lenders, MUFG Bank, Ltd., as administrative agent, and MUFG Union Bank, N.A., Sumitomo Mitsui Banking Corporation, TD Securities (USA) LLC and Mizuho Bank, Ltd., as joint lead arrangers.
The Credit Agreement provides for senior unsecured 364-day term loan facilities in an aggregate principal amount of $750 million, including a $500 million term loan facility (the “Closing Date Facility”) available to be borrowed on the Closing Date (April 15, 2020) and a $250,000,000 term loan facility (the “Delayed Draw Facility”) available to be borrowed in up to three separate borrowings on or prior to July 14, 2020, subject to the satisfaction of customary conditions to borrowing.
The Facilities are common forms of short-term pro rata bank debt which enhance Equinix’s overall liquidity and increase its financial flexibility. The company plans to use the net proceeds from the Facilities for working capital, capital expenditures, acquisitions and other general corporate purposes. On the Closing Date (April 15, 2020), Equinix borrowed $391 million and €100 million in two separate borrowings under the Closing Date Facility.
Borrowings under the Facilities must be repaid in full on or prior to April 14, 2021. Borrowings denominated in U.S. dollars will bear interest at either (x) an index based on LIBOR plus a margin of 1.75% or, at the option of Equinix, (y) the Base Rate (defined as the highest of (a) the Federal Funds Rate (with such rate deemed to be zero if the Federal Funds Rate is less than zero) plus 0.50%, (b) the MUFG prime rate and (c) one-month LIBOR plus 1.00%) plus a margin of 0.75%. Borrowings denominated in Euro will bear interest at an index based on LIBOR plus a margin of 1.50%. A facility fee of 0.20% per annum shall be payable in respect of the total amount of unfunded commitments under the Delayed Draw Facility.
The Credit Agreement contains customary representations and warranties, events of default and affirmative and negative covenants that are substantially similar to the representations and warranties, events of default and affirmative and negative covenants contained in Equinix’s existing multicurrency credit facility, including financial covenants that require Equinix to maintain:
- a consolidated net lease-adjusted leverage ratio of less than or equal to 6.00 to 1.00 as of the last day of each fiscal quarter,
- a consolidated fixed charge coverage ratio greater than or equal to 1.50 to 1.00 as of the last day of each fiscal quarter and
- a consolidated lease-adjusted secured leverage ratio of less than or equal to 2.25 to 1.00 as of the last day of each fiscal quarter.
