Global data center colocation and interconnection services provider, Cyxtera, has commenced a pre-arranged court-supervised Chapter 11 process with substantial backing from its lenders. In recent months, the data center colocation company unsuccessfully tried to find a buyer or lessen its debt burden. The move aims to facilitate a comprehensive balance sheet restructuring as the company charts a path towards long-term success.
In line with the Restructuring Support Agreement (RSA) previously disclosed, Cyxtera and some of its subsidiaries have initiated the Chapter 11 process under the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. The company expects this procedure to bolster its financial position, significantly reduce debt, and drive future prosperity.
Despite the restructuring efforts, Cyxtera’s operations would remain unaffected, and its globally interconnected network of data centers continues to operate seamlessly, according to the company itself. Customers can continue to access their Cyxtera data center locations and tools without interruption, the company added. Cyxtera would remain committed to delivering great services that support the growth and transformation of its clients’ businesses on a global scale.
Nelson Fonseca, CEO of Cyxtera, emphasized the careful consideration given to maximizing value for the company and its stakeholders. He expressed confidence in the decision to embark on this process as a means to explore new avenues for growth. Fonseca expressed gratitude for the substantial support provided by the company’s lenders, recognizing its instrumental role in expediting the procedure. He firmly believes that these strategic actions will position Cyxtera for long-term success while continuing to provide clients with cutting-edge services and unrivaled support.
Under the terms of the RSA, several term lenders have committed to providing $200 million in debtor-in-possession financing. This funding can be converted into an exit facility following the completion of the court-mandated process. The additional capital injection is expected to sustain Cyxtera throughout the restructuring period and beyond.
Or Selling the Business?
Simultaneously, Cyxtera is still actively exploring options to sell the company or secure a significant investment from a new investor while the court-supervised procedure unfolds. The company is optimistic about attracting potential buyers or investors given the strong demand for its global data center colocation platform and the positive momentum it has achieved in its operations.
To ensure business continuity, Cyxtera has submitted standard applications to the Court seeking permission for various activities, including the uninterrupted payment of employee wages, salaries, and benefits. The company anticipates swift approval from the court for these petitions. Furthermore, Cyxtera intends to fulfill its financial obligations to suppliers and vendors for goods and services delivered after the filing date, as part of its commitment to operational optimization. The company is also actively assessing the footprint of its colocation data centers.
It is important to note that the court-supervised procedure specifically excludes Cyxtera’s subsidiaries in Germany, Singapore, and the United Kingdom. These entities will continue to operate independently during the restructuring process.
