In a bid to address its financial challenges, Cyxtera Technologies Inc., a bankrupt data center and co-location services provider, is in advanced discussions with Brookfield Infrastructure Partners to sell a significant portion of its data centers. This potential transaction comes as Cyxtera explores options to recapitalize or sell its business in order to alleviate its financial burden. While negotiations are ongoing and could still fall apart, the sale of its data centers would allow Cyxtera to restructure its operations and ease its mounting debt.
Background: Recapitalization or Sale Options
Cyxtera Technologies Inc. has been evaluating two potential paths to resolve its financial woes – recapitalizing itself or pursuing a sale. With nearly $870 million of debt due next year, the company has been engaging in negotiations with lenders to find a viable solution. Exploring a sale option presents Cyxtera with the opportunity to unload a significant portion of its assets to raise funds and reduce its debt burden.
Negotiations with Brookfield Infrastructure Partners
Discussions between Cyxtera and global infrastructure asset management company Brookfield Infrastructure Partners have reached an advanced stage. The two entities are actively negotiating the terms of a potential deal, which would involve the sale of a large number of Cyxtera’s data centers. However, it is important to note that while progress has been made, there is still a possibility that the negotiations could falter and no agreement will be reached.
Brookfield’s Strategy: Expanding Data Center Holdings
For Brookfield Infrastructure Partners, the potential acquisition of Cyxtera’s data centers aligns with its growth strategy in the data center industry. The company has been actively expanding its data center portfolio through recent acquisitions, making the purchase of Cyxtera’s assets a logical move. By adding Cyxtera’s data centers to its holdings, Brookfield Infrastructure Partners can continue to strengthen its presence in the market and capitalize on the increasing demand for data center services.
Interest from Digital Realty Trust Inc
Aside from Brookfield Infrastructure Partners, another player that has expressed interest in Cyxtera’s assets is Digital Realty Trust Inc., a leading global provider of data center, co-location, and interconnection solutions. Digital Realty Trust’s interest highlights the attractiveness of Cyxtera’s data centers in the market and indicates a potential competitive bidding process for the assets.
Debt situation and implications
Cyxtera’s mounting debt, which amounts to approximately $870 million, has been a significant driver for the company to explore viable solutions through negotiations and potential asset sales. Resolving the debt issue is crucial for Cyxtera’s long-term sustainability and growth prospects. By freeing itself from a part of its debt burden through the sale of its data centers, the company can navigate its financial challenges and focus on restructuring its operations.
Company formation and previous merger
Cyxtera Technologies Inc. was formed in 2017 as a result of a merger between CenturyLink’s data center and co-location business and Medina Capital’s security and data analytics operations. The merger aimed to create a comprehensive provider of infrastructure and security solutions for enterprises. Following this merger, Cyxtera further expanded its operations through a merger with a blank-check firm in 2021, resulting in the combined company being valued at approximately $3.4 billion.
Bankruptcy Plan and Hearing
Cyxtera has made considerable progress in addressing its financial situation and plans to present its bankruptcy plan to the court. A hearing has been scheduled for November 6 to confirm the plan, providing an opportunity for stakeholders to review and evaluate the proposed strategy. This step brings Cyxtera one step closer to resolving its financial challenges and positioning itself for future success.
No comments from parties involved
Representatives from Cyxtera Technologies Inc., Brookfield Infrastructure Partners, and Cyxtera’s financial adviser have declined to comment on the ongoing negotiations and potential deal. As discussions remain sensitive and subject to change, the parties involved have chosen to maintain confidentiality until a definitive agreement is reached or the negotiations conclude.
Cyxtera Technologies Inc.’s advanced discussions with Brookfield Infrastructure Partners for the sale of its data centers represent a potential turning point for the financially struggling company. With mounting debt and the need for a viable solution, exploring a sale option allows Cyxtera to restructure its operations and alleviate its financial burden. As negotiations continue and the bankruptcy plan is presented, the industry awaits the outcome of these developments and their implications for Cyxtera’s future in the data center market.