18. September 2006
Equinix Announces Financing and Updated Details of Expansions in Chicago, Washington, D.C. and New York Areas
Foster City, CA — September 18, 2006 — Equinix, Inc. (Nasdaq: EQIX), the leading provider of network-neutral data centers and Internet exchange services, today announced additional details for the company's Internet Business Exchange™ (IBX®) center expansions in the Chicago, Washington, D.C. and New York markets. The first phase of build outs for these three expansions, previously announced by Equinix, will increase the sellable cabinet capacity by approximately 20%, increasing the company's global footprint to 37,000 sellable cabinets.
To help fund Equinix's expansion plans, the company has received loan commitments, subject to customary closing conditions, for $150 million, $110 million of which is being provided to fund up to 60% of the Chicago expansion IBX data center and the remaining amount to fund the company's Washington, D.C. area expansion efforts. With regards to the Chicago loan, Equinix expects to fix the interest rate on the initial three-year term at approximately 8%. The loan is expected to be interest only during the three-year initial term and contain an option to extend the term of the loan for an additional two years. The company expects to close the loan in the fourth quarter of 2006. This data center is Equinix's third IBX center in the Chicago metro area.
Equinix intends to develop the new Chicago site in multiple phases with over twice the power and cooling specifications of its original design. As previously announced, Equinix intends to invest approximately $165 million to build out the first phase of the Chicago center, of which $70 million is expected to be incurred in 2006. This includes an investment of approximately $50 million to purchase the land, construct a specially built 250,000 square foot shell, acquire access to power, and provision fiber for interconnection to Equinix's downtown IBX center locations. The first phase is expected to have approximately 2,500 cabinets. The company expects to open the center in the third quarter of 2007. Equinix's phased build out approach enables a second expansion phase of approximately 1,300 cabinets, if demand warrants, for an incremental investment of $30 million.
Equinix also announced that it intends to increase the existing mortgage on its Washington, D.C. area campus from $60 million to $100 million on what are expected to be the same terms as the current loan, which is a fixed rate of 8% and a 20-year term. The Washington, D.C. area campus is located in the Dulles Corridor and is home to many of the region's technology companies. Equinix is building out an existing shell on the campus and intends to open the new center for customers in early 2007.
For the New York area expansion, Equinix announced that it has completed the negotiation of terms for its previously announced location for the build out of the company's third IBX center in the region and that it has secured a long-term lease for the property. The approximately 340,000 square foot building shell is located in close proximity to Equinix's existing IBX center in Secaucus, N.J. The initial 15-year term lease, which begins on October 1, 2006, includes an option to purchase the building over the next three years. The new center will be directly linked to Equinix's two other IBX centers in the New York region through redundant dark fiber links managed by Equinix, ensuring a convenient platform for customers in all three centers to access the more than 50 networks available and communicate with each other as if they are in the same center.
Equinix intends to build out the existing New York area site in multiple phases. The first phase will accommodate approximately 1,700 cabinets. Equinix expects this phase to be open for customers in the third quarter of 2007. As previously announced, Equinix intends to invest approximately $75 to $85 million to build out the first phase of the center, of which $5 million is expected to be incurred in 2006. If fully built out, Equinix expects the total cabinet capacity of this center to support up to approximately 4,700 cabinets.
“The financing agreements announced today provide Equinix with attractive financing terms for maximum flexibility in managing our expansion plans without dilution to our shareholders,” said Peter Van Camp, CEO of Equinix. “These three new centers complete our current efforts to secure long-term expansion platforms for contiguous growth in our key markets. The first phase of build outs, available in 2007, will accommodate the robust customer demand we continue to experience and solidify our position as the leading provider of collocation and network exchange services.”
This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from expectations discussed in such forward-looking statements. Factors that might cause such differences include, but are not limited to, the challenges of acquiring, operating and constructing IBX centers and developing, deploying and delivering Equinix services; unanticipated costs or difficulties relating to the integration of IXEurope into Equinix; a failure to receive significant revenue from customers in recently built out data centers; failure to complete any financing arrangements contemplated from time to time; competition from existing and new competitors; the ability to generate sufficient cash flow or otherwise obtain funds to repay new or outstanding indebtedness; the loss or decline in business from our key customers; the results of any litigation relating to past stock option grants and practices; and other risks described from time to time in Equinix's filings with the Securities and Exchange Commission. In particular, see Equinix's recent quarterly and annual reports filed with the Securities and Exchange Commission, copies of which are available upon request from Equinix. Equinix does not assume any obligation to update the forward-looking information contained in this press release.
Equinix and IBX are registered trademarks of Equinix, Inc. Internet Business Exchange is a trademark of Equinix, Inc.