Switch and Data has completed a $110 million bank deal led by Deutsche Bank that backs an acquisitive growth strategy. "The new financing will allow Switch and Data to raise money through senior bank financing with a low cost of debt capital," said George Pollock, Switch and Data's senior v.p. and cfo. BNP Paribas was syndication agent and CIT Group was documentation agent for the facility.
Switch and Data, which is an Internet physical facilities builder and connection service provider, incurred the debt when it bought the colocation services provider MeridianTelesis. According to Pollock, two more acquisitions were slated to be announced as LMW went to press.
"The facility provides the capital necessary to enable the organic growth of the business and will allow us to increase our market share and continue our expansion plans," Pollock added. "We decided to tap the loan market now because the market is strong and the timing works for our acquisition plans," he said. "Switch and Data is still very modestly leveraged and will continue to grow its business," Pollock underlined.
The new financing will replace the $36 million bank debt outstanding under the company's existing credit line with Deutsche Bank. Pollock declined to comment on the pricing of the new or old bank debt. Bankers said the new loan consists of a $35 million "A" loan priced at LIBOR plus 41/2%, a $70 million "B" loan at LIBOR plus 43/4% and a $5 million revolver at LIBOR plus 41/2% (LMW, 3/1).