Internap to Restructure Via Chapter 11

Yesterday, Internap announced that it has entered into a restructuring support agreement with its creditors and filed for Chapter 11 in the southern district of New York. The deal ends the data center and network company’s search for strategic alternatives in the wake of declining EBITDA alongside looming capital lease payments and financial covenants on its debt.

The deal is with an ‘Ad Hoc Lender Group’ holding 77% iof the company’s term loans, and will provide $75M in ‘debtor-in-posession’ financing to support normal operations during the restructuring process. So operationally everything will continue as normal, and hopefully the impact on the company’s employee base will be minimal.  The idea is to transform the company’s $415M outstanding term loan into shares. Of course that will likely wipe out the current shareholders, which is why the company’s stock fell down to $0.14 per share.  

This appears to have been a long time in coming, in that Internap has been seeking amendments to its term loan agreement regularly for some time to hold it off, and even adopted NOL-protection measures last autumn to hinder hostile takeovers and such. So while the current pandemic-related economic turmoil can’t be blamed for their troubles, it’s possible that the timing was accelerated once it became clear the broader financial environment wasn’t going to allow any escape.  Beyond that, I don’t pretend to have followed Internap’s travails too closely, so any details from readers in the comments below would be welcome.

Internap operates 14 data centers of its own and has a colo and network presence in 21 metro markets, mostly in North America. They did $219.6M of revenue in the first 9 months of 2019, which would have put them on track for about $290M give or take for all of 2019 although they haven’t filed their 10-K yet.  

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Categories: Datacenter · Financials