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QTS > SEC Filings for QTS > Form 8-K on 28-Jul-2014All Recent SEC Filings

Show all filings for QTS REALTY TRUST, INC.

Form 8-K for QTS REALTY TRUST, INC.


28-Jul-2014

Entry into a Material Definitive Agreement, Creation of a Direct Financial


Item 1.01. Entry into a Material Definitive Agreement.

On July 23, 2014, QualityTech, LP (the "Operating Partnership"), the operating partnership of QTS Realty Trust, Inc. ("QTS"), and QTS Finance Corporation, a subsidiary of the Operating Partnership formed solely for the purpose of facilitating the offering of the notes described below (the "Co-Issuer" and, together with the Operating Partnership, the "Issuers"), closed an offering of $300 million aggregate principal amount of 5.875% senior notes due 2022 (the "Notes"). The offering was conducted pursuant to Rule 144A and Regulation S of the Securities Act of 1933, as amended (the "Securities Act"), and the Notes have not been registered under the Securities Act or applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.

Also on July 23, 2014, in connection with the offering, QTS, the Issuers and certain of their subsidiaries entered into an Indenture and a Registration Rights Agreement with respect to the Notes.

Indenture

QTS, the Issuers and certain of their subsidiaries entered into an indenture (the "Indenture") with Deutsche Bank Trust Company Americas, as trustee ("Trustee"), pursuant to which the Issuers issued the Notes at a price equal to 99.211% of their face value. Pursuant to the Indenture, the Notes have the following terms, among others:

Interest - Interest on the Notes will accrue from July 23, 2014 at a rate of 5.875% per annum and be payable semi-annually in arrears in cash on February 1 and August 1 of each year, beginning February 1, 2015.

Maturity - The Notes will mature on August 1, 2022.

Guarantees - The Notes are fully and unconditionally guaranteed on a senior basis by all of the Operating Partnership's existing and future subsidiaries (other than foreign subsidiaries and receivables entities) that guarantee any indebtedness of QTS, the Issuers or any other subsidiary guarantor. QTS will not initially guarantee the Notes and will not be required to guarantee the Notes except under certain circumstances.

Ranking - The Notes will be (i) the senior unsecured obligations of the Issuers,
(ii) pari passu in right of payment with all existing and future unsecured senior indebtedness of the Issuers, including the Operating Partnership's indebtedness under its unsecured senior credit facility and the Operating Partnership's guarantee of the credit facility secured by the Richmond property,
(iii) senior in right of payment to any future subordinated indebtedness of the Issuers, if any, (iv) effectively subordinated in right of payment to all existing and future secured indebtedness of the Issuers, to the extent of the value of the collateral securing such indebtedness, (v) structurally subordinated in right of payment to all existing and future indebtedness and other liabilities, including trade payables, and claims of holders of preferred stock, if any, of the Operating Partnership's subsidiaries that are not guarantors of the Notes, including borrowings of one such non-guarantor subsidiary under the Richmond secured credit facility and a guarantee of such borrowings by another non-guarantor subsidiary, and (vi) unconditionally guaranteed by the guarantors on a senior unsecured basis. Each guarantee will be
(i) a senior unsecured obligation of such guarantor, (ii) pari passu in right of payment with all existing and future unsecured senior indebtedness of such guarantor, including, if applicable, such guarantor's guarantee of the Operating Partnership's obligations under the unsecured credit facility, (iii) senior in right of payment to any future subordinated indebtedness of such guarantor, if any, (iv) effectively subordinated in right of payment to all existing and future secured indebtedness of such guarantor, to the extent of the value of the collateral securing that indebtedness, and (v) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and claims of holders of preferred stock, if any, of the non-guarantor subsidiaries.

Optional Redemption - At any time prior to August 1, 2017, the Issuers may redeem the Notes, in whole or in part, at any time at a redemption price equal to (i) 100% of principal amount, plus (ii) accrued and unpaid interest to the redemption date, and (iii) a make-whole premium. On or after August 1, 2017, the Issuers may redeem the Notes, in whole or in part, at a redemption price equal to (i) 104.406% of the principal amount from August 1, 2017 to July 31, 2018,
(ii) 102.938% of the principal amount from August 1, 2018 to July 31, 2019,
(iii) 101.469% of the principal amount from August 1, 2019 to July 31, 2020 and
(iv) 100.000% of the principal amount of the Notes from August 1, 2020 and thereafter, in each case plus accrued and unpaid interest to the redemption date. In addition, at any time prior to August 1, 2017, the Issuers may, subject to certain conditions, redeem up to 35% of the aggregate principal amount of the Notes at 105.875% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net cash proceeds of certain equity offerings consummated by QTS or the Operating Partnership.


Repurchase Obligations - If a Change of Control (as defined in the Indenture) of the Operating Partnership or QTS occurs, holders of the Notes may require the Issuers to repurchase all or part of their Notes at a price of 101% of the principal amount thereof, plus accrued and unpaid interest to the repurchase date. In addition, in certain circumstances the Issuers may be required to use the net proceeds of asset sales to purchase a portion of the Notes at 100% of the principal amount thereof, plus accrued and unpaid interest.

Covenants - The Indenture contains covenants that, among other things, limit the Operating Partnership's ability and the ability of certain of its subsidiaries (its "Restricted Subsidiaries") (i) to incur secured or unsecured indebtedness,
(ii) to pay dividends or distributions on its equity interests or redeem or repurchase equity interests, (iii) to make certain investments or other restricted payments, (iv) to enter into transactions with affiliates, (v) to enter into agreements limiting the ability of the Operating Partnership's restricted subsidiaries to pay dividends or make certain transfers and other payments to the Operating Partnership or to its Restricted Subsidiaries, (vi) to sell assets and (vii) to merge, consolidate or transfer all or substantially all of their assets. The Operating Partnership and its Restricted Subsidiaries also are required to maintain total unencumbered assets (as defined) of at least 150% of their unsecured debt on a consolidated basis. These covenants and definitions . . .



Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The disclosure contained in Item 1.01 above is incorporated herein by reference.



Item 3.03. Material Modifications to Rights of Security Holders.

The disclosure contained in Item 1.01 above is incorporated herein by reference. The Indenture described in Item 1.01 contains a covenant that restricts QTS's ability to pay dividends in certain circumstances.




Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit
Number                                 Exhibit Description

4.1           Indenture, dated July 23, 2014, by and among QualityTech, LP, QTS
              Finance Corporation, QTS Realty Trust, Inc., certain subsidiaries of
              QualityTech, LP and Deutsche Bank Trust Company Americas.

4.2           Registration Rights Agreement, dated July 23, 2014, by and among
              QualityTech, LP, QTS Finance Corporation, QTS Realty Trust, Inc.,
              certain subsidiaries of QualityTech, LP and Deutche Bank Securities
              Inc., KeyBanc Capital Markets Inc., and Merrill Lynch, Pierce, Fenner
              & Smith Incorporated, on behalf of the initial purchasers.


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