Rackspace launches $800 million add-on term B at 99.25-99.5 OID

By Sara Rosenberg

New York, Nov. 2 – Rackspace Hosting Inc. launched at its bank meeting on Thursday an $800 million senior secured add-on covenant-light term loan B (Ba3/BB-/BB+) due Nov. 3, 2023 with price talk of Libor plus 300 basis points with a 1% Libor floor and an original issue discount of 99.25 to 99.5, according to a market source.

The spread and floor on the add-on term loan matches pricing on the existing term loan B.

Amortization on the add-on term loan B is 1% per annum.

Citigroup Global Markets Inc., Deutsche Bank Securities Inc., Barclays, RBC Capital Markets, Credit Suisse Securities (USA) LLC, BMO Capital Markets and Apollo are the joint lead arrangers on the deal. Citigroup is the administrative agent.

Commitments are due at noon ET on Nov. 10, the source added.

Proceeds will be used to fund the acquisition of Datapipe.

With the transaction, the majority owner of Datapipe, Abry Partners, will receive equity in Rackspace.

Closing is expected on Nov. 15.

Rackspace, owned by Apollo Global Management LLC and co-investors, is a San Antonio-based multi-cloud managed services company. Datapipe is a Jersey City, N.J.-based provider of managed services across public and private clouds, managed hosting and colocation.

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