| Item 1.01 | Entry into a Material Definitive Agreement |
General
On December 1, 2020, Rackspace Technology Global, Inc. (the “Company”), a wholly-owned subsidiary of Rackspace Technology, Inc., announced today that it has completed its previously announced offering of $550.0 million in aggregate principal amount of 5.375% Senior Notes due 2028 (the “2028 Notes”). The 2028 Notes were issued pursuant to an indenture, dated as of December 1, 2020 (the “Indenture”), among the Company, the subsidiary guarantors party thereto from time to time (the “Guarantors”) and Wells Fargo Bank, National Association, as trustee (the “Trustee”).
The 2028 Notes bear interest at a fixed rate of 5.375% per annum, accruing from December 1, 2020. Interest is payable semiannually in arrears on June 1 and December 1 of each year, commencing on June 1, 2021. The 2028 Notes will mature on December 1, 2028. The 2028 Notes are senior unsecured obligations of the Company. The 2028 Notes are fully and unconditionally guaranteed, jointly and severally, by each of the Guarantors. The guarantees are senior unsecured obligations of the Guarantors.
The 2028 Notes were offered and sold to “qualified institutional buyers” pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act. The 2028 Notes are not subject to registration rights.
The net proceeds from the sale of the 2028 Notes, together with cash on hand, will be used to fund the repurchase or redemption of all of the Company’s outstanding 8.625% Senior Notes due 2024 (the “2024 Notes”) and to pay related fees and expenses.
Redemption
The Company may redeem some or all of the 2028 Notes at its option prior to December 1, 2023 at a redemption price equal to 100% of the principal amount of the 2028 Notes redeemed, plus a customary “make-whole” premium described in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
In addition, at any time prior to December 1, 2023, the Company may also redeem up to 40% of the aggregate principal amount of the 2028 Notes with funds in an aggregate amount not to exceed the net cash proceeds from certain equity offerings at a redemption price equal to 105.375% of the principal amount of the 2028 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
The Company may redeem the 2028 Notes at its option, in whole at any time or in part from time to time, at the following redemption prices: from December 1, 2023 to November 30, 2024, at a redemption price equal to 102.688% of the principal amount, plus accrued and unpaid interest, if any, to but excluding the redemption date; from December 1, 2024 to November 30, 2025, at a redemption price equal to 101.344% of the principal amount, plus accrued and unpaid interest, if any, to but excluding the redemption date; and from December 1, 2025 and thereafter, at a redemption price equal to 100.000% of the principal amount, plus accrued and unpaid interest, if any, to but excluding the redemption date.
Certain Covenants
The Indenture contains covenants that, among other things, limit the ability of the Company and its restricted subsidiaries to incur certain additional debt, incur certain liens securing debt, pay certain dividends or make other restricted payments, make certain investments, make certain asset sales and enter into certain transactions with affiliates. These covenants are subject to a number of exceptions, limitations, and qualifications as set forth in the Indenture. Additionally, upon the occurrence of a “Change of Control” (as defined in the Indenture), the Company will be required to make an offer to repurchase all of the outstanding 2028 Notes at a price in cash equal to 101% of the aggregate principal amount, plus accrued and unpaid interest, if any, to, but not including, the purchase date.
