Switch Announces Pricing of $600 Million Offering of Senior Notes

Rhea-AI Summary

Switch, Inc. (NYSE: SWCH) announced a private offering of $600 million in 3.75% senior unsecured notes due 2028. The offering, set to close on September 17, 2020, aims to redeem $280 million of outstanding borrowings under its revolving credit facility and $182 million of its term loan. The offering is exempt from registration under the Securities Act and is targeted at qualified institutional buyers. The net proceeds will also support general corporate purposes.

Positive

• Successful pricing of $600 million senior unsecured notes indicates strong market interest.
• Proceeds will significantly reduce outstanding debt by redeeming $462 million in borrowings.

Negative

• Private offering could lead to shareholder dilution.
• Notes will not be registered, limiting their marketability and liquidity.

LAS VEGAS, Sept. 10, 2020 /PRNewswire/ -- Switch, Inc. (NYSE: SWCH) ("Switch") today announced that its subsidiary Switch, Ltd. (the "Issuer") priced its private offering of $600 million in aggregate principal amount of its 3.75% senior unsecured notes due 2028 (the "Notes"). The offering is expected to close on September 17, 2020, subject to customary closing conditions. The private offering is exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). The Notes will be guaranteed by each of the Issuer's subsidiaries that guarantee the Issuer's obligations under its senior secured credit facilities.

The Issuer intends to use the net proceeds from the offering to redeem (i) all outstanding borrowings under Issuer's revolving credit facility, of which $280.0 million are currently outstanding, and (ii) $182.0 million of borrowings under the Issuer's term loan facility, and to pay related fees and expenses. The remaining net proceeds will be used for general corporate purposes.

The Notes have not been, and will not be, registered under the Securities Act, or any state securities laws, and thus, the Notes may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Notes have been offered to persons reasonably believed to be qualified institutional buyers in an offering exempt from registration pursuant to Rule 144A under the Securities Act and to non-U.S. persons outside of the United States in compliance with Regulation S under the Securities Act. This announcement shall not constitute an offer to sell or a solicitation of an offer to buy any of these Notes or any security, and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws. Forward-looking statements generally relate to future events or Switch's future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "scheduled," "predicts," "potential" or "continue" or the negative of these words or other similar terms or expressions that concern the company's expectations, strategy, plans or intentions. Forward-looking statements in this press release include, but are not limited to Switch's expectations regarding the anticipated impact of COVID-19 on our business operations, including our ability to maintain a strong activity pipeline; Switch's expectations regarding building toward its long-term strategic goals, including to entrench itself as a leading destination for mission critical enterprise colocation and secure hybrid cloud ecosystems; Switch's anticipated operating results and capital expenditures for the year ending December 31, 2020; Switch's expectations regarding key transactions and its sales pipeline for the remainder of 2020; expectations regarding future declarations of dividends and cash distributions; expectations regarding anticipated capital investment in infrastructure across the four Prime campus locations; and expectations regarding estimated completion dates for construction projects. Switch's expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to inherent risks, uncertainties and changes in circumstance that are difficult or impossible to predict. The risks and uncertainties that could affect Switch's financial and operating results and cause actual results to differ materially from those indicated by the forward-looking statements made in this press release include, without limitation (i) its ability to successfully implement its business strategies and effectively manage its growth and expansion plans; (ii) delays or unexpected costs in development and opening of data center facilities; (iii) risks related to the COVID-19 pandemic, including disruptions to our business and to those of our customers and suppliers; (iv) the potential of increases in state and federal taxation to address budgetary and other impacts of the COVID-19 pandemic; (v) any slowdown in demand for its existing data center resources; (vi) its ability to attract new customers, realize the anticipated benefits of its new contracts and achieve sufficient customer demand to realize future expected returns on its investments; (vii) its ability to effectively compete in the data center market; (viii) its ability to license space in its existing data centers; (ix) the geographic concentration of its data centers in certain markets; (x) local economic, credit and market conditions that impact its customers in these markets; (xi) the impact of delays or disruptions in third-party network connectivity; (xii) developments in the technology and data center industries in general that negatively impact Switch, including development of new technologies, adoption of new industry standards, declines in the technology industry or slowdown in the growth of the Internet; (xiii) its ability to adapt to evolving technologies and customer demands in a timely and cost-effective manner; (xiv) its ability to obtain necessary capital to fund our capital requirements and our ability to continue to comply with covenants and terms in its credit instruments; (xv) fluctuations in interest rates and increased operating costs, including power costs; (xvi) significant disruptions, security breaches, including cyber security breaches, or system failures at any of its data center facilities; (xvii) loss of significant customers or key personnel; and (xviii) the impact of future changes in legislation and regulations, including potential regulations to address the direct and indirect impacts of the COVID-19 pandemic, changes in real estate and zoning laws, the Americans with Disabilities Act of 1990, environmental and other laws that impact its business and industry, in addition to those under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operation" and elsewhere in Switch's Annual Report on Form 10-K for the year ended December 31, 2019 and in Switch's other reports filed with the Securities and Exchange Commission ("SEC"). Switch's SEC filings are available on the SEC's website at www.sec.gov. The forward-looking statements in this press release are based on information available to Switch as of the date hereof, and Switch disclaims any obligation to update any forward-looking statements to reflect any change in its expectations or any change in events, conditions, or circumstances on which any such statement is based, except as required by law. These forward-looking statements should not be relied upon as representing Switch's views as of any date subsequent to the date of this press release.

Investor contact:
Matthew Heinz, CFA
investorrelations@switch.com 
(702) 479-3993

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SOURCE Switch, Inc.

FAQ

What is the purpose of Switch's offering of senior notes?

The proceeds are intended to redeem $280 million of outstanding borrowings under its revolving credit facility and $182 million under its term loan, along with general corporate purposes.

When is the closing date for Switch's senior notes offering?

The offering is expected to close on September 17, 2020.

What are the terms of Switch's senior unsecured notes?

The notes are priced at a 3.75% interest rate and are due in 2028.

How much is Switch planning to raise from the senior notes offering?

Switch plans to raise $600 million in the offering.

What are the risks associated with Switch's private offering of senior notes?

The offering may result in shareholder dilution as the notes are not registered, limiting their marketability.