Miami, Florida-based data-center operator Cyxtera Technologies Inc announced on Sunday that it has filed for bankruptcy protection in the U.S. Bankruptcy Court for the District of New Jersey. The company cited financial difficulties and a significant funding shortage as the primary reasons behind the decision. Cyxtera aims to utilize the Chapter 11 process to strengthen its financial position, reduce its debt burden, and ensure long-term success for its business.
Cyxtera is known for providing co-location services, enabling companies to store their privately-owned servers and networking equipment in third-party data centers. The company currently operates over 60 data centers across 30 markets. However, since its initial public offering two years ago, Cyxtera has faced a steep decline in its stock value. Cyxtera shares have plummeted more than 90%, trading at $0.16 as of the recent close.
In 2021, Cyxtera went public through a merger with a blank-check firm backed by shareholder activist Starboard Value LP, valuing the combined entity at $3.4 billion. Despite the initial optimism surrounding the merger, the company’s financial struggles persisted.
Cyxtera revealed that it listed both its assets and liabilities in the range of $1 billion to $10 billion. With over 5,000 creditors, the company initiated a restructuring process in May to address its financial challenges. In an effort to stay afloat during the Chapter 11 process, Cyxtera secured $50 million last month. Additionally, the company announced on Sunday that it received a commitment of $200 million in debtor-in-possession financing from its lenders.
While Cyxtera’s subsidiaries in Germany, Singapore, and the United Kingdom are excluded from the court-supervised process, the company is focused on leveraging the Chapter 11 filing to improve its financial health, restructure its business, and ensure the long-term viability of its operations.