Cyxtera Technologies: Cyxtera Receives $50m Lifeline, Satisfies Debts, And Must Sell or Raise Capital

May 05, 2023 | Posted by Abdul-Rahman Oladimeji

A shaky US colocation provider has settled its debts with creditors. The business must find a buyer or investor to continue funding or go bankrupt and cede control to its owners. The company obtained $50 million in new funding from lenders holding over two-thirds of its existing term loan to support its operations last week.  Cyxtera has also signed a Restructuring Support Agreement (RSA) with the lenders to "strengthen the Company's financial position and facilitate the Business's Long-Term Success." Cyxtera may sell or receive a large investment under the RSA. For investors with near-term maturities, lenders will provide long-term funding. Cyxtera would file for bankruptcy under Chapter 11 and transfer majority ownership of the company to the lenders if the RSA-defined third-party transaction fails.

Cyxtera faces long-term debt deadlines in the coming year. Moody's downgraded Cyxtera's corporate family rating (CFR) from B3 to Caa2 in February, deeming its debt obligations "judged to be of poor standing and subject to very high credit risk." According to Cyxtera's Form 8-K, the RSA lenders hold almost two-thirds of the company's term loan claims on the First Lien Facilities and 38% of its equity interests. The 8-K implies Cyxtera has until August to accept a final proposal for the company but could be forced into Chapter 11 as early as May 14.
The new $50 million term matures in May 2024.