Data- Center Operator Cyxtera Files for Bankruptcy
Miami, Florida-based data-center operator Cyxtera Technologies Inc., has filed for bankruptcy protection in the U.S. Bankruptcy Court for the District of New Jersey.
The company cited financial difficulties and a significant funding shortage as the primary reasons behind the decision. Cyxtera aims to utilize the Chapter 11 process to strengthen its financial position, reduce its debt burden, and ensure long-term success for its business.
The company specializes in providing co-location services, enabling businesses to store their privately-owned servers and networking equipment in third-party data centers. The company currently operates over 60 data centers across 30 markets.
Cyxtera entered into an agreement with its lenders in March, to expand its revolving credit facility of $120.1 million, deferring the maturity date to 2024.
However, Cyxtera has faced a steep decline in the stock value since its initial public offering two years ago, during which its stock price has plunged by almost 60%. Cyxtera shares have plummeted more than 90%, trading at $0.16 as of the recent close.
As part of the deal, Cyxtera had agreed to go public through a merger with a blank-check firm backed by shareholder activist Starboard Value LP, valued at the sum of $3.4 billion as a result of the merger.
According to Cyxtera, both its assets and liabilities in the range of $1 billion to $10 billion were listed on the company's balance sheet. With over 5,000 creditors, the company initiated a restructuring process in May to address its financial challenges.
To stay afloat during the Chapter 11 process, Cyxtera secured $50 million last month. Additionally, the company has announced that it received a commitment of $200 million in debtor-in-possession financing from its lenders.
As part of the Chapter 11 filing, Cyxtera's subsidiaries in Germany, Singapore, and the United Kingdom are excluded from being supervised by the Court, however, the company is focusing on leveraging the filing to restructure its business, improve its financial health, and maintain its long-term viability.