Cyxtera, a provider of data center colocation and interconnection services, initiated a pre-arranged court-supervised process under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of New Jersey. Cyxtera expects to use the Chapter 11 process to strengthen the company’s financial position, meaningfully deleverage its balance sheet and facilitate the business’s long-term success. The pre-arranged process was initiated pursuant to the restructuring support agreement Cyxtera reached with certain of its lenders holding more than two-thirds of its outstanding term loan.
Cyxtera is continuing to operate its global platform of interconnected data centers normally and without interruption. Customers also continue to have access to Cyxtera data center sites and equipment as usual.
“We have thoroughly evaluated options to enhance value for the company and our stakeholders,” Nelson Fonseca, CEO of Cyxtera, said. “Together with our lenders, we determined that initiating this process is the best path forward for Cyxtera and our stakeholders as we pursue new opportunities for growth. We appreciate the significant support from our lenders, which will enable us to move through this process as quickly as possible. We are confident these steps will enable us to position our business for the long term as we continue serving our customers with innovative services and the highest levels of support.
“Our recent business momentum and the high demand for our global data center platform are a testament to the hard work and commitment of our team, as well as to the continued support of our customers and business partners. We look forward to emerging from this process as a stronger organization with additional financial flexibility to drive Cyxtera’s next phase of growth.”
Cyxtera has received a commitment for $200 million in debtor-in-possession financing from certain of the term lenders, which is convertible into an exit facility upon the company’s emergence from the court-supervised process. This new financing is expected to provide sufficient liquidity to support Cyxtera during this process and beyond.
As Cyxtera moves through the court-supervised process, it is continuing to pursue a potential sale of the business or a significant investment from a new investor.
The company has filed customary motions with the court seeking authorization to support its operations, including the payment of employee wages, salaries and benefits without interruption. The company expects to receive court approval for these requests shortly. The company intends to pay vendors and suppliers in full for goods and services provided on or after the filing date. Cyxtera is continuing to evaluate its data center footprint, consistent with its commitment to optimizing operations.
The company’s subsidiaries in Germany, Singapore and the United Kingdom are not included in the court-supervised process.
Kirkland & Ellis is serving as legal counsel to Cyxtera, Guggenheim Securities is serving as financial advisor and AlixPartners is serving as restructuring advisor.
