Cogent Communications Holdings Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation, Financial Statements and Exhibits
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Item 1.01. Entry into a Material Agreement.
On June 17, 2025 (the “Closing Date”), Cogent Communications Group, LLC (“Cogent Group”) and Cogent Finance, Inc. (the “Co-Issuer” and, together with Cogent Group, the “Issuers”), two wholly owned subsidiaries of Cogent Communications Holdings, Inc. (the “Company”), completed an offering of $600.0 million aggregate principal amount of 6.500% senior secured notes due 2032 (the “Notes”) for issuance in a private placement not registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”). The Notes were offered and sold only to persons reasonably believed to be qualified institutional buyers in an unregistered offering pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons in transactions outside the United States in compliance with Regulation S under the Securities Act.
The net proceeds from the offering were approximately $596.8 million after deducting estimated offering expenses. On June 4, 2025, the Issuers issued a notice of conditional full redemption to holders of all of the outstanding $500.0 million aggregate principal amount of their 3.500% Senior Secured Notes due 2026 (the “Existing Secured Notes”), specifying the Closing Date as the redemption date (the “Redemption Date”). On the Closing Date, Cogent Group used a portion of the net proceeds from the offering to redeem in full, and satisfy and discharge the Issuers’ obligations under the Existing Secured Notes. Cogent Group expects to use the remainder of the net proceeds for general corporate purposes and/or to make special or recurring dividends to the Company.
The Notes were issued pursuant to, and are governed by, an indenture, dated June 17, 2025 (the “Indenture”), among the Issuers, the Company, the other guarantors named therein and Wilmington Trust, National Association, as trustee and collateral agent. The Notes are jointly and severally guaranteed (the “Subsidiary Guarantees”) on a senior secured basis by each of Cogent Group’s existing and future material domestic subsidiaries (other than the Co-Issuer), subject to certain exceptions (collectively, the “Subsidiary Guarantors”). In addition, the Notes are guaranteed (together with the Subsidiary Guarantees, the “Guarantees”) on a senior unsecured basis by the Company (together with the Subsidiary Guarantors, the “Guarantors”). However, the Company is not subject to the covenants under the Indenture. Under certain circumstances, the Guarantors may be released from these Guarantees without the consent of the holders of the Notes.
The Notes and the Subsidiary Guarantees are the Issuers’ and the Subsidiary Guarantors’ senior secured obligations, secured by a first-priority lien on substantially all of the Issuers’ and the Subsidiary Guarantors’ assets, subject to certain exceptions, exclusions, limitations and permitted liens. The Notes and the Subsidiary Guarantees are effectively senior to any of the Issuers’ and the Subsidiary Guarantors’ existing and future senior unsecured indebtedness, including the Issuers’ 7.000% Senior Notes due 2027 (the “Existing Unsecured Notes”), of which $450.0 million were issued in June 2022 and $300.0 million were issued in June 2024, and future indebtedness secured by liens on the collateral securing the Notes that are junior to the liens on the collateral securing the Notes, in each case, to the extent of the value of the collateral securing the Notes. Without giving effect to collateral arrangements, the Notes and the Subsidiary Guarantees rank pari passu in right of payment with all of the Issuers’ and the Subsidiary Guarantors’ existing and future senior indebtedness that is not subordinated in right of payment to the Notes or the Subsidiary Guarantees, including the Existing Unsecured Notes, and are effectively subordinated to any of the Issuers’ and the Subsidiary Guarantors’ indebtedness that is secured by assets that do not constitute collateral or that is secured by liens on the collateral securing the Notes that are senior to the liens securing the Notes, in each case, to the extent of the value of the collateral securing such indebtedness. In addition, the Notes and the Subsidiary Guarantees rank contractually senior in right of payment to all of the Issuers’ and the Subsidiary Guarantors’ subordinated indebtedness and are structurally subordinated to any existing and future indebtedness and other liabilities of Cogent Group’s non-guarantor subsidiaries (other than the Co-Issuer). The Company’s guarantee is its senior unsecured obligation and is effectively subordinated to the Company’s secured indebtedness to the extent of the value of the collateral securing such indebtedness. Without giving effect to collateral arrangements, the Company’s guarantee ranks pari passu in right of payment with all of the Company’s existing and future senior indebtedness, including its guarantee of the Existing Unsecured Notes, and contractually senior in right of payment to all of the Company’s future subordinated indebtedness. The Company’s guarantee is structurally subordinated to any existing and future indebtedness and other liabilities of the Company’s subsidiaries that are neither the Issuers nor a Subsidiary Guarantor, including the secured IPv4 address revenue notes issued by Cogent IPv4 LLC, a special-purpose, bankruptcy remote, indirect wholly owned subsidiary of the Company.
The Notes bear interest at a rate of 6.500% per annum. Interest began to accrue on the Notes on June 17, 2025 and will be paid semi-annually in arrears on January 1 and July 1 of each year, commencing January 1, 2026, to the persons who are registered holders of the Notes at the close of business on the December 15 or June 15 immediately preceding the applicable interest payment date. Unless earlier redeemed or repurchased, the Notes will mature on July 1, 2032.
The Issuers may redeem some or all of the Notes at any time prior to July 1, 2028 at a price equal to 100% of the principal amount of the Notes, plus a “make-whole” premium as set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption. The Issuers may also redeem up to 40% of the principal amount of the Notes using proceeds of certain equity offerings completed prior to July 1, 2028 at a redemption price equal to 106.500%, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption, subject to certain exceptions. Thereafter, the Issuers may redeem the Notes, in whole or in part, at a redemption price ranging from 103.250% of the aggregate principal amount of the Notes redeemed to par (depending on the year), in each case, as set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.
If Cogent Group undergoes specific kinds of changes in control accompanied by certain ratings events, the Issuers will be required to offer to repurchase the Notes from holders at a price equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase. Additionally, if Cogent Group or any of its restricted subsidiaries sells assets and does not apply the proceeds from such sale in a certain manner or certain other events have not occurred, under certain circumstances, the Issuers will be required to use the net proceeds to make an offer to purchase the Notes at an offer price in cash equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.
In connection with any offer to purchase all or any of the Notes (including a change of control offer, asset sale offer or any tender offer), if holders of not less than 90% of the aggregate principal amount of the outstanding Notes validly tender their Notes, the Issuers or a third party are entitled to redeem any remaining Notes at the price paid to each holder.
The Indenture includes covenants that restrict Cogent Group and its restricted subsidiaries’ (including the Co-Issuer’s) ability to, among other things:
| · | incur indebtedness; |
| · | issue certain preferred stock or similar equity securities; |
| · | pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock; |
| · | make certain investments and other restricted payments, such as prepayment, redemption or repurchase of certain subordinated indebtedness; |
| · | create liens; |
| · | consolidate, merge, sell or otherwise dispose of all or substantially all of the properties and assets of Cogent Group and its restricted subsidiaries taken as a whole; |
| · | incur restrictions on the ability of a restricted subsidiary to pay dividends or make other payments; and |
| · | enter into transactions with affiliates. |
However, the covenants provide for certain exceptions to these restrictions, and neither the Company nor any subsidiary of the Company that is not Cogent Group or a subsidiary of Cogent Group is subject to the covenants under the Indenture. Certain covenants will cease to apply to the Notes if, and for so long as, the Notes have investment grade ratings from any two of Moody’s Investors Service, Inc., Fitch Ratings, Inc. and S&P Global Ratings and so long as no default or event of default under the Indenture has occurred and is continuing. Upon suspension of the covenants, the Guarantees and the related liens on the collateral, as applicable, will be released until such time as the covenants are no longer suspended.
The principal amount of the Notes would become immediately due and payable upon the occurrence of certain bankruptcy or insolvency events involving Cogent Group, the Co-Issuer or certain of Cogent Group’s subsidiaries, and may be declared immediately due and payable by the trustee or the holders of at least 25% of the aggregate principal amount of the then-outstanding Notes upon the occurrence of certain events of default under the Indenture. Events of default include the following with respect to the Issuers and Cogent Group’s significant subsidiaries: (i) failure to pay principal, premium or interest at required times; (ii) failure to comply with any other agreements in the Indenture; (iii) default on certain material indebtedness that is caused by a failure to make a payment within any applicable grace period when due at maturity or results in the acceleration of such indebtedness prior to its express maturity; (iv) failure to pay certain material judgments; (v) a Guarantee being held unenforceable or invalid or ceasing for any reason to be in full force and effect or a Guarantor denying or disaffirming its obligations under its Guarantee; (vi) certain events of bankruptcy or insolvency; and (vii) certain defaults with respect to the security documentation related to the Notes and the collateral securing the Notes and the Guarantees of the Subsidiary Guarantors.
Copies of the Indenture and the form of Note (included in the Indenture) are attached to this Current Report on Form 8-K (this “Current Report”) as Exhibits 4.1 and 4.2, respectively. The foregoing description does not purport to be complete and the descriptions of the Indenture and the Notes in this Current Report are summaries and are qualified in their entirety by the terms of the Indenture and the Notes, respectively, which are incorporated by reference herein.
Forward-Looking Statements
Except for historical information and discussion contained herein, statements contained in this Current Report constitute forward-looking statements within the meaning of the U.S. securities laws. These forward-looking statements do not include the impact of any mergers, acquisitions, divestitures or business combinations that may be announced or closed after the date hereof. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Such statements include, but are not limited to, the anticipated use of proceeds from the offering, and other statements identified by words such as “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “anticipates,” “estimates,” “intends,” “plans” and similar expressions. The statements in this Current Report are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Numerous factors could cause or contribute to such differences, including, among others, risks related to the use of proceeds from the offering of the Notes; the impact of the Company’s acquisition of Sprint Communications LLC and its subsidiaries (the “Sprint Business”), including difficulties integrating the Company’s business with the acquired Sprint Business, which may result in the combined company not operating as effectively and efficiently as expected; transition services required to support the Sprint Business and the related costs continuing for a period longer than expected; vaccination and in-office requirements; delays in the delivery of network equipment or optical fiber; loss of key right-of-way agreements; future economic instability in the global economy, including the risk of economic recession and recent bank failures and liquidity concerns at certain other banks, which could affect spending on Internet services; the impact of changing foreign exchange rates (in particular the Euro to U.S. dollar and Canadian dollar to U.S. dollar exchange rates) on the translation of the Company’s non-U.S. dollar denominated revenues, expenses, assets and liabilities into U.S. dollars; legal and operational difficulties in new markets; the Company’s ability to maintain our regulatory licenses that are required in the markets in which we operate; the imposition of a requirement that we contribute to the U.S. Universal Service Fund on the basis of the Company’s Internet revenue; changes in government policy and/or regulation, including rules regarding data protection, cyber security and net-neutrality; increasing competition leading to lower prices for the Company’s services; the Company’s ability to attract new customers and to increase and maintain the volume of traffic on the Company’s network; the ability to maintain the Company’s Internet peering and right-of-way arrangements on favorable terms; the ability to renew the Company’s long-term leases of optical fiber and right-of-way agreements that comprise the Company’s network; the Company’s reliance on a limited number of equipment vendors, and the potential for hardware or software problems associated with such equipment; tariffs imposed on equipment we purchase for the Company’s network or other similar government-imposed fees and charges; the dependence of the Company’s network on the quality and dependability of third-party fiber and right-of-way providers; the Company’s ability to retain certain customers that comprise a significant portion of the Company’s revenue base; the management of network failures and/or disruptions; the Company’s ability to make payments on the Company’s indebtedness as they become due; outcomes in litigation; and risks associated with variable interest rates under the Company’s interest rate swap agreement, as well as other risks discussed from time to time in the Company’s filings with the U.S. Securities and Exchange Commission, including, without limitation, the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025. The Company undertakes no duty to update any forward-looking statement or any information contained in this Current Report or in other public disclosures at any time.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT
The information required by Item 2.03 is contained in Item 1.01 and is incorporated herein by reference.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits:
| Exhibit | ||
| Number | Description | |
| 4.1 | Indenture, dated as of June 17, 2025, among Cogent Communications Group, LLC, Cogent Finance, Inc., the guarantors named therein and Wilmington Trust, National Association, as trustee and collateral agent. | |
| 4.2 | Form of 6.500% Senior Secured Note due 2032 (included as Exhibit A to Exhibit 4.1 hereto). | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: June 17, 2025
| Cogent Communications Holdings, Inc. | ||
| By: | /s/ David Schaeffer | |
| Name: David Schaeffer | ||
| Title: President and Chief Executive Officer | ||