US telco Cincinnati Bell is looking to raise up to US$426m by selling operating partnership units in CyrusOne, the data centre business which it spun off in 2013.
Cincinnati Bell has entered into an agreement with CyrusOne whereby it will sell the…
US telco Cincinnati Bell is looking to raise up to US$426m by selling operating partnership units in CyrusOne, the data centre business which it spun off in 2013.
Cincinnati Bell has entered into an agreement with CyrusOne whereby it will sell the units to the data centre operator, which in turn will then offer the stock in a public offering.
CyrusOne will buy 12.4 million units from Cincinnati Bell at US$29.88 apiece and sell them as shares to the public at US$31.12 each with help from joint bookrunners Citigroup, Morgan Stanley, Barclays, Deutsche Bank, Goldman Sachs and JP Morgan.
The underwriters have a greenshoe where they can sell a further 1.86 million shares in CyrusOne should they wish.
All of the net proceeds of the transaction will go to Cincinnati Bell, which will see its stake in CyrusOne drop from 43.7% to 24.5%, or 21.7% if the banks exercise their over-allotment option.
Cincinnati Bell created CyrusOne in 2013 when they put their data centre assets – which consisted of 23 data centres in nine markets at the time – into a new company that would operate as a tax-efficient real estate investment trust.
REITs receive special tax considerations and typically offer investors high yields as they have to distribute a minimum of 90% of their taxable profits as dividends.
Cincinnati Bell initially retained 69% of CyrusOne, but this fell to 43.7% in June 2014 when it offloaded 15.9 million shares.