Brookfield to Buy Cyxtera Assets for $775M Amid Chapter 11 Bankruptcy Filing

CyxteraBrookfield Infrastructure Partners (NYSE: BIP, TSX: BIP.UN) and its institutional partners will buy nearly all of Cyxtera’s assets for $775 million, after Cyxtera filed for Chapter 11 bankruptcy previously this year. As a provider of digital infrastructure services, Cyxtera offers data center colocation and interconnectivity to its global clientele.

As per the terms of the asset acquisition deal, Brookfield is going to buy the real estate where seven of Cyxtera’s U.S. data centers are situated from several landlords. Cyxtera would be able to enhance its data center platform by gaining greater control over its cost structure, expand ownership of its current facilities, and seize growth possibilities in response to strong client demand thanks to these deals.

“We are happy to have reached this agreement with Brookfield, which indicates a positive future for our partners, customers, and employees,” said Cyxtera CEO Nelson Fonseca. “Our company’s success throughout the reorganization process is a credit to our clients’ faith in our staff and cutting-edge data center infrastructure. We will be able to maintain our business momentum and better position Cyxtera for the future with this arrangement, the portfolio adjustments made to the data centers, and most significantly, our increasing facility ownership.”

Cologix in Canada

Among the transactions made in connection with the asset purchase agreement is a comprehensive agreement with Digital Realty (NYSE: DLR) and Digital Core REIT (SI: DCRU) for Brookfield to acquire the real estate supporting several of Cyxtera’s U.S. data centers.

Separately, Cyxtera and its landlord, Digital Realty, have reached an arrangement to modify the terms of Cyxtera’s present leases at three locations in the United States and three locations abroad, enabling Cyxtera to leave those locations in 2024 while ensuring a smooth transition for colocation clients.

Lastly, Cyxtera has signed an agreement to sell its business in its Montreal and Vancouver data centers to Cologix.

“We will move forward with a partner that recognizes the strength of our business and will provide the guidance and resources to drive our next phase of growth,” added Mr. Fonseca, citing Brookfield’s extensive global infrastructure knowledge, seasoned team, and proven track record. “We’re still fully dedicated to ensuring that this shift goes as smoothly as possible for all parties involved, and we’re excited to keep providing Cyxtera‘s clients with the cutting-edge services and excellent customer care they’ve grown to expect.”

The District of New Jersey U.S. Bankruptcy Court has received a file containing the whole provisions of the asset acquisition deal. The date of the hearing to approve the company’s Chapter 11 plan and Brookfield transaction is November 16, 2023. Apart from obtaining court permission, the asset acquisition deal must also meet statutory requirements and customary closing conditions. Closing of the Brookfield acquisition is anticipated during the first quarter of 2024.