Rackspace Technology announces refinancing transactions

Rackspace Technology announced that it has closed a private debt exchange with certain of its creditors representing more than 72% of the company’s first lien term loans and more than 64% of its first lien notes, as well as 100% of its revolving credit facility, or RCF, commitments. Through the private exchange, Rackspace has eliminated more than $375M of net debt and has received $275M of new money that will come to the balance sheet as additional liquidity to advance key strategic initiatives. Additionally, the maturities on the RCF and other participating senior debt facilities were extended to May 2028. In connection with the transaction, the company plans to launch a public debt exchange offer to all its outstanding lenders and first lien noteholders. The public exchange offer will offer existing lenders and first lien noteholders new term loans or new first lien notes, as applicable, with an improved security position, tighter covenants, and other restrictions. Through full participation in the public exchange offer, the company has the opportunity to eliminate more than $600M in net debt, reducing net annual interest expense by approximately $13M. These transactions represent another significant step forward in the company’s capital structure evolution. Following the closing of the public exchange offer and assuming full participation, Rackspace will have raised $575M of new capital over the past 12 months, reducing the company’s net financial debt by over $900M during such period and lowering its net annual interest expense by approximately $40M. In addition, with the extension and amendment of the RCF, Rackspace will continue to have access to the full $375M available under the RCF, bringing total liquidity to over $700M. There will be no change in Rackspace’s equity ownership as a result of the transaction, which significantly decreases the company’s debt balance and reduces its interest expense.