STT to sell Equinix stake

October 2005

STT Communications has announced the sale of its entire holding of 10.2m shares in Equinix, a stake of about a third of the company on a fully diluted basis.  About half the stock will be made available via a public offering with the balance sold through a forward contract arranged with CSFB.  Understandably Equinix stock has suffered as a result of the announcement in early October, falling from the low $40s down to $36 per share, which still values the company at just under $900m.  STT acquired its stake following its $30m cash investment and three-way merger of its i-STT data centre subsidiary with that of Asia-Pacific colo operator Pihana and Equinix in December 2002, a deal that effectively rescued Equinix and allowed it to retire up to 80% of its long term debt at the same time.  (Equinix purchased some $130m of outstanding debt and senior notes for $23m).  Apart from the timing of it this sale would not appear to have been unexpected though, since STT also now owns 72% of Global Crossing that it acquired when rescuing that company from Chapter 11 in 2002.  Owning a large, global network and a major stake in a carrier neutral colocation provider could appear a slightly conflicting strategy which the upcoming share sale will now resolve.  STT is a wholly owned subsidiary of the Government of Singapore’s investment group Temasek Holdings.

 

In a separate announcement Equinix also announced the resignation of President and Chief Operating Officer Phil Koen, to be effective in March next year, a move which closely follows the recent change in role for Equinix founder and CTO Jay Adelson.  In a statement issued earlier in October Equinix announced that Adelson had “transitioned” from being a full time employee to becoming a “strategic advisor and spokesperson for the company”.  According to the statement this will allow Adelson to pursue “his other entrepreneurial interests”.

 

Tim Anker

The Colocation Exchange

(This item has also appeared in the November edition of Data Centre News)