Business Context and Reporting Period
Company: Digital Realty Trust, Inc. and Digital Realty Trust, L.P.
Filing Type: Form 8-K (Current Report)
Date of Report: July 12, 2017
Event: Pricing of a private offering of senior unsecured guaranteed notes and update on the DuPont Fabros Technology (DFT) Merger.
Key Financial Metrics and Capital Structure
This filing details a debt issuance rather than operational financial results (revenue, profit, or cash flow). Key capital metrics include:
- 2024 Notes: £250 million aggregate principal amount; 2.750% interest rate; payable annually in arrears.
- 2029 Notes: £350 million aggregate principal amount; 3.300% interest rate; payable annually in arrears.
- Total Offering Size: £600 million aggregate principal amount.
- Guarantees: Notes are senior unsecured obligations of Digital Stout Holding, LLC, fully and unconditionally guaranteed by Digital Realty Trust, Inc. and Digital Realty Trust, L.P.
- Settlement Date: Expected July 21, 2017.
Material Changes and Strategic Transactions
The primary material change is the execution of a new debt offering to support the ongoing merger with DuPont Fabros Technology, Inc. (DFT).
- DFT Merger Status: On June 8, 2017, the company entered into an Agreement and Plan of Merger with DFT. The merger is subject to customary closing conditions.
- Use of Proceeds (2024 Notes): Primarily to fund repayment, redemption, or discharge of DFT debt and transaction fees/expenses related to the DFT Merger. Excess proceeds may be used to repay borrowings under the global revolving credit facility, acquire properties, fund development, or for general corporate purposes.
- Use of Proceeds (2029 Notes): To temporarily repay borrowings under the global revolving credit facility, acquire properties/businesses, fund development, and provide working capital.
Guidance, Risks, and Contingencies
The filing contains forward-looking statements regarding the timing and consummation of the note offering and the DFT Merger.
- Contingencies: Completion of the offering and the merger is subject to the satisfaction or waiver of customary closing conditions.
- Risks: The company cannot assure that the offering or the DFT Merger will be completed on anticipated terms or at all.
- Regulatory Status: The Notes are sold outside the United States under Regulation S and are not registered under the Securities Act of 1933.
Investor Verification Checklist
- Verify the final settlement of the £600 million note offering on or around July 21, 2017.
- Monitor the status of the DFT Merger closing conditions and the specific amount of DFT debt to be repaid using the 2024 Notes proceeds.
- Review the impact of the new debt on the company's leverage ratios and interest coverage once the notes are settled.
- Confirm the utilization of the global revolving credit facility following the temporary repayment funded by the 2029 Notes.