WASHINGTON - Cogent Communications Holdings, Inc. (NASDAQ: CCOI) has announced its subsidiaries' plan to offer $300 million in senior notes due in 2027. The offering, restricted to qualified institutional buyers and certain non-U.S. persons, involves notes guaranteed by Cogent Communications Group, LLC and Cogent Finance, Inc., with the parent company also providing a guarantee.
These 7.000% senior notes are not fungible with the existing unsecured notes of the same rate and maturity. Approximately $110 million of the proceeds will prepay an existing agreement at a discounted rate, with the rest allocated for general corporate use, which may include special or recurring dividends.
Cogent Communications is known for providing various internet access and infrastructure services across multiple countries. The company's management highlighted that the offering's success is not guaranteed and that the notes will not be registered under the Securities Act, limiting their sale to certain exemptions.
The announcement is based on a press release statement from Cogent Communications Holdings, Inc. and includes cautionary statements regarding forward-looking information, which involves risks and uncertainties that could cause actual results to differ materially.
Investors are reminded that such offerings are subject to market conditions and there is no assurance that the issuance and sale of the notes will be completed.
In other recent news, Cogent Communications has been under a financial microscope with both promising and concerning developments. The company's Q1 2024 earnings report showed a slight decrease in total revenues to $266.2 million, while EBITDA saw an increase to $115 million. The report also noted the issuance of $206 million in IPV4 securitization notes and an increase in its quarterly dividend by $0.01 per share.
In contrast, Wells Fargo has adjusted its outlook on Cogent Communications, reducing the price target to $55 from the previous $62. The financial institution cited concerns over the company's financial health, including challenges such as the impending reduction in payments from T-Mobile US (NASDAQ:TMUS) and the continuous free cash flow burn.
In spite of these concerns, Cogent Communications remains focused on asset monetization and long-term growth. The company anticipates a long-term average revenue growth of 5-7% and is planning to add approximately 100 carrier-neutral data centers to its network annually.
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