Rackspace Technology Announces Refinancing Transactions, Significantly Reducing Debt and Securing New Money Investment
March 12 2024 - 3:15PM
Rackspace Technology®
(NASDAQ: RXT), (“Rackspace” or the “Company”), a
leading end-to-end hybrid, multicloud, and AI solutions
company, today announced that it has closed a private debt
exchange (the “Private Exchange”) with certain of its creditors
representing more than 72% of the Company’s first lien term loans
and more than 64% of its first lien notes, as well as 100% of its
Revolving Credit Facility (“RCF”) commitments.
Through the Private Exchange, Rackspace has
eliminated more than $375 million of net debt and has received $275
million of new money (the “New Money Financing”) that will come to
the balance sheet as additional liquidity to advance key strategic
initiatives. Additionally, the maturities on the RCF and other
participating senior debt facilities were extended to May 2028.
In connection with the transaction, the Company
plans to launch a public debt exchange offer (the “Public Exchange
Offer”) to all its outstanding lenders and first lien noteholders.
The Public Exchange Offer will offer existing lenders and first
lien noteholders new term loans or new first lien notes, as
applicable, with an improved security position, tighter covenants,
and other restrictions. Through full participation in the Public
Exchange Offer, the Company has the opportunity to eliminate more
than $600 million in net debt, reducing net annual interest expense
by approximately $13 million.
These transactions represent another significant
step forward in the Company’s capital structure evolution.
Following the closing of the Public Exchange Offer and assuming
full participation, Rackspace will have raised $575 million of new
capital over the past 12 months, reducing the Company’s net
financial debt by over $900 million during such period and lowering
its net annual interest expense by approximately $40 million. In
addition, with the extension and amendment of the RCF, Rackspace
will continue to have access to the full $375 million available
under the RCF, bringing total liquidity to over $700 million.
“By both significantly reducing our debt and
infusing new capital, this transaction strengthens Rackspace
Technology’s financial position and enhances our ability to
continue delivering value to our customers with industry-leading
hybrid, multicloud and AI solutions,” said Amar Maletira, Chief
Executive Officer of Rackspace Technology. “The confidence of our
financial partners is an encouraging testament to the momentum we
have achieved over the last year, and we look forward to
accelerating execution of our strategic growth
initiatives.”
There will be no change in Rackspace’s equity
ownership as a result of the transaction, which significantly
decreases the Company’s debt balance and reduces its interest
expense.
Advisors Paul, Weiss, Rifkind,
Wharton & Garrison LLP served as legal counsel for the Company,
PJT Partners LP served as investment banker for the Company, and C
Street Advisory Group served as strategic communications advisor in
the transaction. Latham & Watkins LLP served as legal counsel
to the special committee of the Company’s board of directors.
About Rackspace
TechnologyRackspace Technology is a leading
end-to-end hybrid, multicloud, and AI solutions company. We design,
build, and operate our customers’ cloud environments across all
major technology platforms, irrespective of technology stack or
deployment model. We partner with our customers at every stage of
their cloud journey, enabling them to modernize applications, build
new products, and adopt innovative technologies.
Important InformationThis press
release is for informational purposes only and does not constitute
or form part of any offer or invitation to purchase or sell, or any
solicitation of any offer to sell or purchase, notes or any other
securities or debt instruments, and neither this press release nor
any part of it, nor the fact of its release, shall form the basis
of, or be relied on or in connection with, any contract therefor.
The Public Exchange Offer for the Company’s existing first lien
notes will be made only by and pursuant to the terms and conditions
of a confidential offering memorandum that will only be made
available to eligible holders of the Company’s existing first lien
notes. The complete terms and conditions of the Public Exchange
Offer for the Company’s existing first lien notes will be set forth
in such confidential offering memorandum. The Public Exchange Offer
for the Company’s existing term loans will be made only by and
pursuant to the terms and conditions of an exchange agreement that
will only be made available to holders of the Company’s existing
term loans. The complete terms and conditions of the Public
Exchange Offer for the Company’s existing term loans will be set
forth in such exchange agreement. Neither the Company nor any of
its affiliates takes any position or makes any recommendation as to
whether or not eligible holders should participate in the Public
Exchange Offer for the Company’s existing first lien notes or
existing term loans once commenced.
Forward-Looking Statements The
Company has made statements in this press release that are
forward-looking and therefore subject to risks and uncertainties.
All statements, other than statements of historical fact, included
in this press release are, or could be, “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995 and are made in reliance on the safe harbor
protections provided thereunder. These forward-looking statements
include statements related to the Private Exchange, the Public
Exchange Offer, the New Money Financing, the anticipated benefits
of the Private Exchange, the Public Exchange Offer and the New
Money Financing, and the Company’s strategic initiatives, among
other things. The Public Exchange Offer will be subject to
customary closing conditions. Any forward-looking statement made in
this press release speaks only as of the date on which it is made.
The Company undertakes no obligation to publicly update or revise
any forward-looking statement, whether as a result of new
information, future developments or otherwise. Forward-looking
statements can be identified by various words such as “expects,”
“intends,” “will,” “anticipates,” “believes,” “confident,”
“continue,” “propose,” “seeks,” “could,” “may,” “should,”
“estimates,” “forecasts,” “might,” “goals,” “objectives,”
“targets,” “planned,” “projects,” and similar expressions. These
forward-looking statements are based on management’s current
beliefs and assumptions and on information currently available to
management. The Company cautions that these statements are subject
to risks and uncertainties, many of which are outside of its
control, and could cause future events or results to be materially
different from those stated or implied in this press release,
including among others, risk factors that are described in the
Company’s Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q, Current Reports on Form 8-K, and other filings with the
Securities and Exchange Commission, including the sections entitled
“Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” contained
therein.
Media ContactNatalie Silva,
publicrelations@rackspace.com
Investor Relations ContactSagar
Hebbarir@rackspace.com
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