Equinix, Inc. ( EQIX Quick Quote EQIX - Free Report) priced a public offering of four series of senior notes, aggregating $2.6 billion in principal amount.
This consists of 1.250% senior notes due 2025, 1.800% senior notes due 2027 and 3.000% senior notes due 2050, each with a principal amount of $500 million, respectively. The offering also includes $1.1-billion senior notes maturing in 2030, with an interest rate of 2.150%.
Subject to the satisfaction of customary closing norms, the offering is likely to close on Jun 22.
Equinix plans to use around $391 million of the net proceeds for the full repayment of the outstanding balance under the company’s senior unsecured 364-day term loan facilities. Notably, on Apr 15, it secured the term loan facility with an aggregate principal amount of $750 million. On the same date, the company borrowed $391 million and €100 million (or $109.8 million).
It will also use part of the net proceeds to fully redeem its outstanding €750-million senior notes due 2024 with an interest rate of 2.875% and $1,1-billion senior notes due 2026 with an interest rate of 5.875% along with the payment of premiums and accrued interest on the redemption date.
Any remaining net proceeds from the offering will be used for general corporate purposes.
Equinix’s efforts to strengthen its liquidity in these testing times and tap the debt market amid a low interest-rate environment are a strategic fit.
In fact, on May 14, the company also sold 2,587,500 shares of common stock at a public offering price, including 337,500 shares sold to underwriters. Net proceeds from the offering were $1,683.5 million, after deducting underwriting discounts and commissions, and estimated offering expenses. The net proceeds are expected to fund selected data center site buyouts.
Hence, Equinix’s financial policy approach underlines a disciplined, and balanced debt and equity funding strategy to support organic and acquisition-driven growth. Such a consistent capital-sourcing policy enables it to maintain sufficient liquidity to meet operating requirements, fund acquisitions and pay dividends.
However, the note offering increases the company’s long-term debt.
Moreover, shares of this Zacks Rank #3 (Hold) company have gained 33.6% over the past year against the real estate market’s decline of 7.2%.
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Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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