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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported):
March 23, 2022
CYRUSONE INC.
(Exact Name of Registrant as Specified in its Charter)
Maryland |
|
001-35789 |
|
46-0691837 |
(State or other jurisdiction
of incorporation)
|
|
(Commission
File Number) |
|
(IRS Employer
Identification No.) |
2850 N. Harwood Street,
Suite 2200
Dallas,
TX
75201
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (972)
350-0060
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions (see General
Instruction A.2.):
¨ |
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR
230.425) |
¨ |
Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12) |
¨ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)) |
¨ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
|
Trading
Symbol(s) |
|
Name of each exchange on which registered |
Common Stock, $0.01 par value |
|
CONE |
|
The NASDAQ Global Select Market |
1.450% Senior Notes due 2027
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CONE27 |
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The NASDAQ Stock Market LLC
|
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ¨
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange
Act. ¨
Introductory Note
As previously disclosed, on November 14, 2021, CyrusOne Inc., a
Maryland corporation (the “Company”), entered into an Agreement and
Plan of Merger (the “Merger Agreement”) with Cavalry Parent L.P., a
Delaware limited partnership (“Parent”), and Cavalry Merger Sub
LLC, a Delaware limited liability company and a wholly owned
subsidiary of Parent (“Merger Sub”), which provides for the merger
of Merger Sub with and into the Company (the “Merger”), with the
Company surviving the Merger as a wholly owned subsidiary of Parent
(the “Surviving Company”).
On March 25, 2022 (the “Closing Date”), upon the terms and subject
to the conditions set forth in the Merger Agreement and in
accordance with the applicable provisions of the Maryland General
Corporation Law and the Delaware Limited Liability Company Act, the
Merger was consummated. At the effective time of the Merger (the
“Effective Time”), the separate limited liability company existence
of Merger Sub ceased, and the Company survived the Merger as a
wholly owned subsidiary of Parent.
Item 1.01 Entry Into a Material Definitive Agreement
US Revolving Credit Agreement
On March 25, 2022, Parent entered into a credit agreement (the
“U.S. Revolving Credit Agreement”), among Parent, as borrower, the
lenders party thereto (the “Revolver Lenders”), Goldman Sachs Bank
USA, as administrative agent, Goldman Sachs Bank USA, as collateral
agent, Goldman Sachs Bank USA, Barclays Bank plc, Wells Fargo Bank,
N.A., and KKR Capital Markets LLC as global coordinating lead
arrangers and joint lead bookrunners, Citigroup Global Markets Inc.
as coordinating lead arranger and joint lead bookrunner, and BMO
Capital Markets Corp., Banco Santander, S.A., Societe Generale,
Sumitomo Mitsui Banking Corporation and TD Securities (USA) LLC as
joint lead arrangers and joint bookrunners. Proceeds from the U.S.
Revolving Credit Agreement were available on the Closing Date to
fund certain funding shortfalls and transaction expenses in
connection with the Merger, to fund certain reserves, to fund
working capital adjustments and reimbursements for capital
expenditures pursuant to the Merger Agreement, and will be
available from and after the Closing Date for working capital and
any general corporate purpose, including to repay the obligations
outstanding of certain of Parent’s subsidiaries under certain
existing debt facilities and to cash collateralize certain
outstanding letters of credit. The obligations under the U.S.
Revolving Credit Agreement are secured by certain pledged equity
interests held by Parent and certain of its subsidiaries which own
land or unencumbered real estate assets located in each case in the
U.S. (each such subsidiary, a “Revolver Guarantor”).
The U.S. Revolving Credit Agreement provides for a $1,500,000,000
senior secured multi-currency revolving credit facility (the
“Revolving Credit Facility”) of which up to $200,000,000 may be
used to issue letters of credit. The U.S. Revolving Credit
Agreement also includes an accordion feature pursuant to which
Parent is permitted to obtain additional revolving commitments so
long as the ratio of the consolidated total net debt to
consolidated property value of certain real property held by Parent
and its subsidiaries does not exceed a certain percentage on a pro
forma basis. The Revolving Credit Facility provides for borrowings
in U.S. Dollars, Euros, Pounds Sterling, Canadian Dollars, Japanese
Yen and Swiss Francs.
The interest rates for borrowings under the U.S. Revolving Credit
Agreement are, at the option of the borrower, based on a floating
rate or base rate, plus a margin on floating rate loans and on base
rate loans. The U.S. Revolving Credit Agreement includes certain
covenants, representations and events of default customary for debt
facilities of this type.
In connection with the U.S. Revolving Credit Agreement, the
Revolver Guarantors entered into a guarantee agreement (the
“Revolver Guarantee Agreement”) pursuant to which the Revolver
Guarantors have provided a guarantee of Parent’s obligations under
the U.S. Revolving Credit Agreement, the Revolver Guarantors
entered into a pledge agreement (the “Revolver Pledge Agreement”)
pursuant to which the Revolver Guarantors have pledged certain
equity interests as collateral for Parent’s obligations under the
U.S. Revolving Credit Agreement, and Parent and the Revolver
Guarantors entered into a first lien intercreditor agreement (the
“First Lien Intercreditor Agreement”) which sets forth customary
terms with respect to the exercise of remedies between the secured
creditors under the U.S. Revolving Credit Agreement and other first
lien secured parties.
Balance Sheet Loan Agreement
On March 25, 2022, certain subsidiaries of CyrusOne LP, a Maryland
limited partnership (“CyrusOne LP”) (such subsidiaries
collectively, the “Balance Sheet Borrower”), entered into a loan
agreement (the “Balance Sheet Loan Agreement”), among the Balance
Sheet Borrower, as borrower, the lenders party thereto (the
“Balance Sheet Lenders”), Goldman Sachs Bank USA, as administrative
agent (the “Balance Sheet Administrative Agent”), BMO Capital
Markets Corp., Banco Santander, S.A., Societe Generale, Sumitomo
Mitsui Banking Corporation and TD Securities (USA) LLC as joint
lead arrangers and joint bookrunners. Proceeds from the Balance
Sheet Loan Agreement were used, among other things, to pay a
portion of the purchase price in connection with the Merger and for
other corporate purposes. The loan is secured by the Balance Sheet
Borrower’s interest in those certain real estate assets identified
in the Balance Sheet Loan Agreement (collectively, the “Balance
Sheet Property”).
The Balance Sheet Loan Agreement provides for a loan in the maximum
principal amount of $5,500,000,000, comprised of (i) an initial
advance in the amount of $4,500,000,000 (the “Balance Sheet Initial
Advance”), and (ii) up to $1,000,000,000 of future advances (the
“Balance Sheet Future Advance”) to be used by Balance Sheet
Borrower for certain capital improvement, tenant improvement and
leasing costs incurred in connection with the Balance Sheet
Property. The Balance Sheet Initial Advance was disbursed to the
Balance Sheet Borrower on March 25, 2022, along with a portion of
the Balance Sheet Future Advance. The Balance Sheet Loan Agreement
provides for borrowing in U.S. Dollars.
The interest rate for borrowing under the Balance Sheet Loan
Agreement is based on Term SOFR, plus a margin. The Balance Sheet
Loan Agreement includes requirements to maintain certain financial
ratios, with failure to maintain such ratios resulting in cash
management, and customary covenants, representations and events of
default.
In connection with the Balance Sheet Loan Agreement, CyrusOne LP
entered into (i) a guaranty agreement (the “Balance Sheet Guaranty
Agreement”) pursuant to which CyrusOne LP guarantees the
nonrecourse carveout obligations of the Balance Sheet Borrower
under the Balance Sheet Loan Agreement and (ii) an Environmental
Indemnity Agreement (the “Balance Sheet Environmental Indemnity”)
pursuant to which CyrusOne LP is obligated (together with the
Balance Sheet Borrower) to indemnify the Balance Sheet
Administrative Agent and the Balance Sheet Lenders for any losses
sustained on account of environmental matters.
Short Tenor Loan Agreement
On March 25, 2022, certain subsidiaries of CyrusOne LP
(collectively, the “Short Tenor Borrower”), entered into a loan
agreement (the “Short Tenor Loan Agreement”), among the Short Tenor
Borrower, as borrower, the lenders party thereto (the “Short Tenor
Lenders”), Goldman Sachs Bank USA, as administrative agent (the
“Short Tenor Administrative Agent”), BMO Capital Markets Corp.,
Banco Santander, S.A., Societe Generale, Sumitomo Mitsui Banking
Corporation and TD Securities (USA) LLC as joint lead arrangers and
joint bookrunners. Proceeds from the Short Tenor Loan Agreement
were used, among other things, to pay a portion of the purchase
price in connection with the Merger and for other corporate
purposes. The loan is secured by the Short Tenor Borrower’s
interest in those certain real estate assets identified in the
Short Tenor Loan Agreement (collectively, the “Short Tenor
Property”).
The Short Tenor Loan Agreement provides for a loan in the maximum
principal amount of $3,500,000,000, all of which was disbursed to
the Short Tenor Borrower on March 25, 2022. The Short Tenor Loan
Agreement provides for borrowing in U.S. Dollars.
The interest rate for borrowing under the Short Tenor Loan
Agreement is based on Term SOFR, plus an initial margin, which
escalates every six months. The Short Tenor Loan Agreement includes
requirements to maintain certain financial ratios, with failure to
maintain such ratios resulting in cash management, and customary
covenants, representations and events of default.
In connection with the Short Tenor Loan Agreement, CyrusOne LP
entered into (i) a guaranty agreement (the “Short Tenor Guaranty
Agreement”) pursuant to which CyrusOne LP guarantees the
nonrecourse carveout obligations of the Short Tenor Borrower under
the Short Tenor Loan Agreement and (ii) an Environmental Indemnity
Agreement (the “Short Tenor Environmental Indemnity”) pursuant to
which CyrusOne LP is obligated (together with the Short Tenor
Borrower) to indemnify the Short Tenor Administrative Agent and the
Short Tenor Lenders for any losses sustained on account of
environmental matters.
EU Loan Facilities Agreement
On March 25, 2022, CyrusOne Dutch Holdings B.V. (the “EU Loan
Borrower”), a subsidiary of CyrusOne LP, entered into a facilities
agreement (the “EU Loan Facilities Agreement”), among the EU Loan
Borrower, as borrower, the lenders party thereto (the “EU Loan
Lenders”), Mount Street Mortgage Servicing Limited, as facility
agent and security agent and Barclays Bank PLC, Citibank N.A.,
London Branch, Goldman Sachs Bank USA, Wells Fargo Bank
International Unlimited Company, Banco Santander, S.A., BMO Capital
Markets Corp, Société Générale S.A., Sumitomo Mitsui Banking
Corporation, Brussels Branch, and TD Securities (USA) LLC as joint
lead arrangers.
Proceeds from the EU Loan Facilities Agreement were used, among
other things, to refinance existing indebtedness of the EU Loan
Borrower and for other corporate purposes. The loan is
secured by, among other things, all of the shares in the EU Loan
Borrower held by CyrusOne Foreign Holdings LLC (“EU Loan Foreign
Holdings”) and the EU Loan Borrower’s interest in certain
subsidiaries of the EU Loan Borrower.
The EU Loan Facilities Agreement provides for drawings in euro and
sterling in the maximum principal amount of €839,438,251 and
£412,702,434 (respectively), to be used by EU Loan Borrower related
to certain data-centre assets in England, Ireland, the Netherlands
and Germany. The EU Loan Initial Advance was disbursed to EU
Loan Borrower on March 25, 2022, along with a portion of the EU
Loan Future Advance.
The interest rate for borrowing under the EU Loan Facilities
Agreement is based on EURIBOR for amounts drawn in euro and SONIA
for amounts drawn in sterling, plus an initial margin. The EU
Loan Facilities Agreement includes no default financial covenants
and customary representations, undertakings and events of
default.
In connection with the EU Loan Facilities Agreement, CyrusOne LP
entered into a guarantee agreement (the “EU Loan Guarantee
Agreement”) pursuant to which CyrusOne LP guarantees payment to the
EU Loan Lenders in the event of certain voluntary bankruptcy events
in respect of EU Loan Foreign Holdings.
Item 1.02 Termination of a Material Definitive Agreement
On the Closing Date, in connection with the consummation of the
Merger and the entry into the U.S. Revolving Credit Agreement,
Balance Sheet Loan Agreement, Short Tenor Loan Agreement and EU
Loan Facilities Agreement, all of the outstanding loans under the
Credit Agreement, dated as of March 29, 2018, by and among CyrusOne
LP, as borrower, the subsidiary borrowers from time to time party
thereto, the lenders party thereto and JPMorgan Chase Bank, N.A.,
as administrative agent (as amended on March 31, 2020 and as
further amended prior to the date hereof, the “Existing Credit
Agreement”), which initially provided for (i) a $1.4 billion senior
unsecured multi-currency revolving credit facility, (ii) senior
unsecured term loans due 2023 in a dollar equivalent principal
amount of $400.0 million and (iii) senior unsecured term loans due
2025 in a principal amount of $700.0 million, were paid in full
(together with accrued interest and unpaid fees and expenses
related thereto but excluding certain customary contingent
obligations and existing letters of credit which were cash
collateralized or otherwise backstopped), all commitments to extend
credit under the Existing Credit Agreement were terminated and all
guarantees and security interests in respect of the Existing Credit
Agreement and all other related loan documents were released. The
Company did not incur any material early prepayment or termination
penalties as a result of such terminations.
Item 2.01 Completion of Acquisition or Disposition of
Assets
The information in the Introductory Note above is incorporated by
reference into this Item 2.01.
As described above, at the Effective Time and in accordance with
the Merger Agreement, (i) Parent completed its previously announced
acquisition of the Company, (ii) the Company became a wholly owned
subsidiary of Parent and (iii) each share of common stock, par
value $0.01 per share, of the Company (the “Company Common Stock”),
issued and outstanding immediately prior to the Effective Time
(other than (a) shares of Company Common Stock held by Parent or
Merger Sub, which were canceled, and (b) shares of Company Common
Stock owned by any direct or indirect wholly owned subsidiary of
the Company or Parent (other than Merger Sub), which were, at the
election of Parent, either converted into shares of common stock of
the Surviving Company or canceled) was converted into the right to
receive an amount in cash equal to $90.50 (the “Merger
Consideration”), without interest.
In addition, at the Effective Time, other than as described below,
equity awards, consisting of stock options and restricted stock
units with respect to Company Common Stock, restricted shares of
Company Common Stock and LTIP Units of CyrusOne LP, were vested (to
the extent unvested) and converted into the right to receive the
Merger Consideration, less the exercise price in the case of stock
options, plus the amount of any accrued dividend equivalents with
respect to such equity awards, to the extent applicable. In
determining the vesting level for purposes of the foregoing, all
performance criteria was deemed achieved at the maximum levels.
Notwithstanding the foregoing, equity awards granted to employees
after the date of the Merger Agreement were converted into
cash-based awards at the Effective Time, based on the Merger
Consideration, and remained outstanding and continue to vest in
accordance with their terms.
The Merger Consideration was funded through equity contributions
received by Parent and with proceeds from debt financing.
The foregoing description of the Merger Agreement and the
transactions contemplated thereby is not complete and is subject to
and qualified in its entirety by reference to the Merger Agreement, which was filed as
Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on
November 15, 2021, the terms of which are incorporated herein
by reference.
Item 2.03 Creation of a Direct Financing Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant
The information included in Item 1.01 of this Current Report on
Form 8-K is incorporated by reference into this Item 2.03.
Item 3.01 Notice of Delisting or Failure to Satisfy a Continuing
Listing Rule or Standard; Transfer of Listing
The information in the Introductory Note above and in Item 2.01 of
this Current Report on Form 8-K is incorporated by reference into
this Item 3.01.
In connection with the consummation of the Merger, the Company
notified the NASDAQ Global Select Market (together with the NASDAQ
Stock Market LLC, “Nasdaq”) that trading in the Company Common
Stock should be suspended and listing of the Company Common Stock
on Nasdaq should be removed. Trading of the Company Common Stock on
Nasdaq was suspended at the end of after-market trading on March
24, 2022. The Company has requested that Nasdaq file with the
Securities and Exchange Commission (the “SEC”) an application on
Form 25 to delist and deregister the Company Common Stock under
Section 12(b) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). In addition, the Company notified Nasdaq that
it expects to voluntarily delist its outstanding 1.450% Senior
Notes due 2027 (the “2027 Notes”) from Nasdaq. The Company expects
to file with the SEC an application on Form 25 to delist and
deregister the 2027 Notes under Section 12(b) of the Exchange Act
on or around April 4, 2022. Following the effectiveness of the Form
25 related to the 2027 Notes, the Company intends to file with the
SEC a Form 15 requesting the termination of registration of the
Company Common Stock and 2027 Notes under Section 12(g) of the
Exchange Act and the suspension of reporting obligations under
Section 13(a) and 15(b) of the Exchange Act with respect to the
Company Common Stock and 2027 Notes.
Item 3.03 Material Modification to Rights of Security
Holders
The information in the Introductory Note above and in Item 2.01,
Item 3.01 and Item 5.03 of this Current Report on Form 8-K is
incorporated by reference into this Item 3.03.
Item 5.01 Changes in Control of Registrant
The information in the Introductory Note above and in Item 2.01 and
Item 5.02 of this Current Report on Form 8-K is incorporated by
reference into this Item 5.01.
As a result of the consummation of the Merger, a change of control
of the Company occurred, and the Company became a wholly owned
subsidiary of Parent.
Item 5.02 Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers
Upon the consummation of the Merger, each of Lynn A. Wentworth,
David H. Ferdman, Alex Shumate, John W. Gamble Jr., T. Tod
Nielsen, Denise Olsen and William E. Sullivan ceased to be
directors of the Company.
Additionally, effective as of the Effective Time, Waldemar Szlezak
and Will Brilliant became directors of the Company.
Prior to the Closing Date, David H. Ferdman, Katherine Motlagh,
John P. Hatem and Robert M. Jackson each entered into an agreement
with Parent and the Company, pursuant to which they agreed that
their previously disclosed deal retention bonuses would be
cancelled. In addition, the agreements provide for the grant to
such individuals of an equity interest in Parent or one of its
subsidiaries or affiliates following the Closing.
Item 5.03 Amendments to Articles of Incorporation or Bylaws;
Changes in Fiscal Year
The information provided in the Introductory Note and Item 2.01 of
this Current Report on Form 8-K is incorporated herein by
reference.
Pursuant to the Merger Agreement, at the Effective Time, the
charter and bylaws of the Company were amended and restated in the
forms filed as Exhibit 3.1 and Exhibit 3.2, respectively, to this
Current Report on Form 8-K, which are incorporated herein by
reference.
Item 8.01 Other Events
Redemption and Satisfaction and Discharge of Notes
On March 25, 2022, following the Effective Time, (i) CyrusOne LP
and CyrusOne Finance Corp., a Maryland corporation and a wholly
owned subsidiary of CyrusOne LP (together with CyrusOne LP, the
“2019 Indenture Issuers”), delivered notices to Wells Fargo Bank,
N.A., as trustee (the “Trustee”), under the Indenture, dated as of
December 5, 2019 (as amended and supplemented from time to time,
the “2019 Indenture”), by and among the 2019 Indenture Issuers, the
Company, as the guarantor, the Trustee, and, in the case of the
Third Supplemental Indenture dated as of January 22, 2020 to
the 2019 Indenture, Deutsche Bank Trust Company Americas, as paying
agent and security registrar, and (ii) CyrusOne Europe Finance DAC,
a designated activity company organized under the laws of Ireland
(the “2021 Indenture Issuer” and, together with the 2019 Indenture
Issuers, the “Issuers”), delivered a notice to Deutsche Bank AG,
London Branch (the “Paying Agent”), under the Indenture, dated as
of May 26, 2021 (as amended, the “2021 Indenture” and together with
the 2019 Indenture, the “Indentures”), among the 2021 Indenture
Issuer, the Company, as the guarantor, the Trustee, the Paying
Agent, and Deutsche Bank Trust Company Americas, as security
registrar and authenticating agent, in each case notifying the
Trustee and the Paying Agent, as applicable, of their election to
redeem in full (the “Redemption”) on April 11, 2022 all of the
outstanding (a) 2.900% Senior Notes due 2024 (the “2024 Notes”)
issued by the 2019 Indenture Issuers, (b) 2027 Notes issued by the
2019 Indenture Issuers, (c) 3.450% Senior Notes due 2029 (the “2029
Notes”) issued by the 2019 Indenture Issuers, (d) 2.150% Senior
Notes due 2030 (the “2030 Notes”) issued by the 2019 Indenture
Issuers and (e) 1.125% Senior Notes due 2028 (the “2028 Notes” and,
together with the 2024 Notes, the 2027 Notes, the 2029 Notes and
the 2030 Notes, the “Notes”) issued by the 2021 Indenture
Issuer.
The Issuers have delivered and irrevocably deposited funds with the
Trustee in connection with the satisfaction and discharge of the
Issuers’ respective obligations under each Indenture (the
“Discharge”). The Issuers have instructed the Trustee and Paying
Agent, as applicable, to provide notice of the Redemption and the
Discharge to the holders of each series of Notes. The Redemption
and the Discharge will be made pursuant to the terms of each
Indenture.
This Current Report on Form 8-K does not constitute notice of
redemption under the optional redemption provisions of the
Indentures nor does it constitute an offer to sell, or the
solicitation of an offer to buy, any securities. In addition, this
Current Report on Form 8-K is neither an offer to purchase, nor the
solicitation of an offer to sell, any securities, including the
Notes.
Press Release
On March 25, 2022, the Company issued a press release announcing
the consummation of the Merger and the pending delisting of the
2027 Notes. A copy of the press release is filed as Exhibit 99.1 to
this Current Report on Form 8-K and incorporated herein by
reference.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
* |
Schedules and exhibits omitted pursuant to Item
601(b)(2) of Regulation S-K. The Company agrees to furnish
supplementally a copy of any omitted schedule or exhibit upon
request by the SEC. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
|
CYRUSONE INC. |
|
|
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Date: March 25, 2022 |
By: |
/s/ Robert M. Jackson |
|
|
Robert M. Jackson |
|
|
Executive Vice President,
General Counsel and Secretary
|
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