Cincinnati Bell will use the CyrusOne IPO to pay off debt and increase value for shareholders

Cincinnati Bell Plans IPO for Data Center Division CyrusOne to Pay Off Debt

Add Your Comments

Telecommunications provider Cincinnati Bell announced on Thursday its intention to pursue an initial public offering of a company that will be formed to own and operate CyrusOne, the data center operator it acquired in June 2010.

Cincinnati Bell acquired CyrusOne for about $525 million cash to increase the scope of its data center operations. Headquartered in Texas, CyrusOne now has data centers across the US, London and Singapore, with plans for a one million square foot data center in Phoenix. Phase one of the Phoenix project is expected to span 40,000 square feet and be opened by 2013.

In February 2012, Cincinnati Bell announced its initial plans to restructure or acquire financing for its CyrusOne division. The board had approved a few options, including a partial separation through sale, IPO or other transaction, or a complete separation.

According to the press release, Cincinnati Bell says it may operate CyrusOne as a real estate investment trust which uses the pooled capital of investors to purchase and manage income property, a report by Data Center Knowledge explains. REITs are required to distribute 90 percent of taxable income to investors, and data center developers like Digital Realty, DuPont Fabros and CoreSite Realty are structured as REITs.

Cincinnati Bell believes that a REIT structure could create more value for shareholders, since the stock performance of existing data center REITs gained up to 30 percent in 2011, Data Center Knowledge says.

The main objective from the transaction aside from growing its data center business is to pay down debt for the remaining telecommunications company, and of course, maximize value for its shareholders.

Cincinnati Bell has not disclosed the size of the offering, and says it plans to register an official IPO filing with the US Securities and Exchange Commission.

Talk back: Have you explored restructuring options for your business? Would you consider this option for paying off debt? Let us know in a comment.

Help us get better! Fill out our WHIR reader survey to let us know what works and what doesn’t. And enter to win a $100 Amazon gift card.

Add Your Comments

  • (will not be published)