According to US media reports including Dgtl Infra Real Estate, Cyxtera Technologies, which voluntarily filed for Chapter 11 bankruptcy relief on June 4, 2023, is seeking court approval for a series of steps to sell or attract investment for its reorganised assets. The process involves setting up marketing, auction, and bidding procedures aimed at identifying the highest or most beneficial offers, with the ultimate goal of maximising value for its first lien lenders.
"More than 75 potential partners were contacted to gauge their interest in acquiring either some or all of Cyxtera’s assets. Of these, 37 signed non-disclosure agreements (NDAs), and 6 submitted non-binding letters of intent (LOIs)," Digtl Infra says.
Cyxtera has proposed a schedule to finalise its marketing efforts, with a focus on minimizing administrative expenses and business disruption. The deadline for confirming whether to approve a sale transaction is set for no later than September 22, 2023.
The bidding procedures will create further opportunities to market the sale of Cyxtera’s assets, receive additional bids, and, if necessary, hold an auction. This strategy aims to garner additional interest and secure the highest recovery possible for all stakeholders, the news reports say.
According to the timeline, the deadline by which Cyxtera may choose a Stalking Horse Bidder is July 16. All bids should be received by July 19, and an auction, if one is needed, will be held on July 24. Subsequently, Cyxtera will file on the docket a notice identifying the successful bidder and key terms of the agreement.
DBS Group Research says Cyxtera will be "rejecting its leases" at Moses Lake (US) and Amsterdam to save US$114 million. Neither are owned by any S-REIT.
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Cyxtera went public via a SPAC in 2021. The company combined with the Nasdaq-listed Starboard Value Acquisition Corp. (SVAC) in a US$3.1 billion deal. Within a year, market watchers said the company was looking to go private again.
Cyxtera operates operates more than 60 facilities totaling more than 245MW across 29 markets globally; the majority of its portfolio is leased.
However, the unprecedented speed at which interest rates rose caused Cyxtera’s annualised interest expense to balloon from $35.9 million in 1Q2022 to US$75.7 million in 1Q2023. The company has just over US$1 billion in debt maturing in April and May 2024.
Cyxtera is a major tenant for both Digital Core REIT and Mapletree Industrial Trust ME8U . DBS says it believes the worst is over for DC REIT. Hence it is maintaining a buy recommendation with a target of US$0.90.
