Iron Mountain to Raise $1.1B With Private Placement of Notes
Iron Mountain Incorporated IRM recently announced a senior note offering of $1.1 billion through a private placement. This denotes an upsize from the company’s previous offering of $850 million. These notes, due in 2031, are priced at 4.500% and will be guaranteed by the company’s subsidiaries.
The latest offering is likely to further boost the company’s flexibility. Iron Mountain plans to utilize the net proceeds from the offering to redeem all the C$250 million of aggregate principal amount of 5 3/8% senior notes due in 2023 issued by Iron Mountain Canada Operations. The company also intends to use the proceeds to redeem all $250 million of 5 3/8% senior notes due in 2026 issued by Iron Mountain US Holdings.
Additionally, Iron Mountain is expected to use the net proceeds to redeem the $300 million 3% senior notes due in 2025 and reduce the outstanding balances under its revolving credit facility.
Iron Mountain’s efforts to tap the debt market amid a low interest-rate environment are strategic.
Moreover, the company exited second-quarter 2020 with total liquidity of $1.2 billion, pro forma for redemption of $1 billion of 2024 notes on Jul 2.
Further, Iron Mountain delivered better-than-expected second-quarter results, reflecting strength in its core storage business, with the company enjoying a steady stream of recurring revenues from the same. Notably, organic growth in recurring revenues from the storage business is likely to drive the company’s long-term performance. Also, focus on data-center business will diversify its revenue mix amid soaring demand for interconnection and colocation spaces.
Shares of this Zacks Rank #3 (Hold) company have depreciated 6.6% over the past year, while its industry has declined 4.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Companies are tapping the debt market in a bid to bolster liquidity and boost financial flexibility amid the low rate environment. Some of these companies that raised capital in the recent months by offering senior notes are Digital Realty DLR, OUTFRONT Media OUT and Regency Centers REG.
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