The exterior of an INAP flagship data center in Los Angeles. (Image: INAP)
Colocation provider INAP (Internap Corporation) has completed a financial restructuring and emerged from bankruptcy, the company announced today. INAP has submitted a request filed for Chapter 11 bankruptcy on March 16, citing the need to strengthen its capital structure after failing to find a buyer or strategic partner.
INAP negotiated a “prepared” bankruptcy with its lenders, which enabled it to complete its reorganization in just seven weeks. INAP emerges as a private company, having carried out a complete restructuring operation of debt against equity. To improve liquidity, the company also entered into a new five-year, $ 225 million term loan facility, as well as a three-year, $ 75 million exit facility. The sellers and most other unsecured creditors will be paid, and INAP retains its leases of third-party data center space.
The reorganized INAP will be headed by new CEO Michael Sicoli, who had previously served as the company’s president and chief financial officer. Sicoli succeeds Peter Aquino, who led the company since 2016.
“Today marks the start of an exciting new chapter for INAP,” said Aquino. “When we started the restructuring process, we did so with a clear objective of strengthening our capital structure and better positioning INAP for long-term growth and success,” said Aquino, President and CEO general leaving the INAP. “Our ability to meet this goal and get out of Chapter 11 as quickly as we did is a testament to our incredibly talented team and the strong relationships we have had with our customers and partners. I want to thank our lenders for working with us on this consensual restructuring plan.
INAP operates in 21 markets around the world, offering high density colocation, managed cloud hosting and powerful network services. INAP has over one million square feet of data centers, including approximately 600,000 square feet of technical data center space.
Chapter 11 offers relief to creditors while a business reorganizes its finances, with the bankruptcy court overseeing and approving its operations as it restructures. INAP had been exploring strategic alternatives for some time, but on March 16 it announced it had agreed to a restructuring with a loan group holding 77% of its debt.
Sicoli said the restructuring had improved INAP’s finances and solvency. “With our new capital structure in place, we are stronger than ever and poised to grow by offering the most compelling combination of colocation, cloud and network services in the industry,” said Sicoli.
In a court case, Sicoli said that the restructuring “is the result of extensive negotiations in good faith between debtors and their key stakeholders, and represents a complete restructuring and maximizing value for the benefit of all creditors”, noting that 98 percent of lenders voted in favor of the plan, which was approved by bankruptcy court on May 4.
INAP had been listed on the NASDAQ, and owners of INAP shares saw most of the value of their holdings wiped out by the bankruptcy filing. The owners of common shares of INAP can apply for “new warrants to purchase common shares”. Court documents do not give a clear idea of the value of these warrants, but shares of INAP are currently trading at 9 cents, up from $ 1 at the start of 2020. The stock was trading at $ 18 per share in 2017, with an all-time high of $ 82 in 2007.
Sicoli also noted that while there are uncertainties and “downside risks” associated with the COVID-19 pandemic, INAP has not experienced any significant disruption to its activities. “Demand for (INAP) services has remained strong as businesses around the world rely more than ever on IT infrastructure and Internet connectivity for communications and commerce. ”