Long-Term Debt

6 Months Ended

Jun. 30, 2021

Long-term debt consists of the following:


	June 30,		December 31,
	2021		2020
	(in thousands)
3.75% senior unsecured notes, due September 2028	$	600,000	$	600,000
4.125% senior unsecured notes, due June 2029	500,000		—
Term loan facility, interest paid at the defined LIBOR rate plus applicable interest margin (2.35% and 2.40% at June 30, 2021 and December 31, 2020, respectively), due June 2024	400,000		400,000
Long-term debt, gross	1,500,000		1,000,000
Less: unamortized debt issuance costs and original issue discount	(12,662)		(8,787)
Long-term debt, net	$	1,487,338	$	991,213

Credit Agreement

As of June 30, 2021, the Company had $493.1 million of available borrowing capacity under its revolving credit facility, net of outstanding letters of credit.

2029 Senior Unsecured Notes

In June 2021, Switch, Ltd. (the “Issuer”) issued $500.0 million aggregate principal amount of its 4.125% senior unsecured notes due 2029 (the “Notes”), pursuant to an indenture (the “Indenture”) by and among the Issuer, the guarantors named therein and U.S. Bank National Association, as trustee. The net proceeds were primarily used to fund the acquisition of Data Foundry.

The Notes bear interest at the rate of 4.125% per annum, payable in cash semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2021. The Notes mature on June 15, 2029 and are fully and unconditionally guaranteed on a senior unsecured basis by each of the Issuer’s current and future domestic restricted subsidiaries that guarantee its obligations under its senior unsecured credit facilities.

Prior to June 15, 2024, the Issuer may redeem the Notes, in whole or in part, at a redemption price of 100% of the principal amount thereof, plus a “make-whole” premium set forth in the Indenture, plus accrued and unpaid interest. In addition, prior to June 15, 2024, the Issuer may redeem up to 40% of the aggregate principal amount of the Notes at a redemption price equal to 104.125% of the principal amount thereof, plus accrued and unpaid interest, with the net cash proceeds from one or more equity offerings. On or after June 15, 2024, the Issuer may redeem some or all of the Notes at a redemption price decreasing annually from 102.063% of the principal amount to 100% of the principal amount, plus accrued and unpaid interest.

In the event of a change of control triggering event (as defined in the Indenture), the Issuer will be required to offer to repurchase the Notes at a price equal to 101% of the principal amount thereof, plus any accrued and unpaid interest. If holders of not less than 90% in aggregate principal amount of the outstanding Notes validly tender in connection with any tender offer or other offer to purchase the Notes (including pursuant to a change of control offer, an alternate offer, or an offer to purchase with the proceeds from any asset disposition, all as described in the indenture), the Issuer will have the right to redeem the remaining Notes outstanding following such purchase at a cash redemption price equal to the applicable price paid to holders in such purchase, plus accrued and unpaid interest.

The Notes are general unsecured obligations of the Issuer and the guarantors. Under the terms of the Indenture, the Notes rank equally in right of payment with all of the Issuer’s and the guarantors’ existing and future senior indebtedness, and rank contractually senior in right of payment to the Issuer’s and the guarantors’ future indebtedness and other obligations that are expressly subordinated in right of payment to the Notes. The Notes are effectively subordinated to the Issuer’s and the guarantors’ existing and future secured indebtedness, including secured indebtedness under the senior unsecured credit facilities, to the extent of the value of the assets securing such indebtedness. The Notes and guarantees are structurally subordinated to all existing and future indebtedness and liabilities of the Issuer’s subsidiaries that do not guarantee the Notes.

The Indenture contains covenants that, subject to exceptions and qualifications, among other things, limit the Issuer’s ability and the ability of its Restricted Subsidiaries (as defined in the Indenture) to incur additional indebtedness and guarantee indebtedness, pay dividends or make other distributions or repurchase or redeem Switch, Inc.’s capital stock, prepay, redeem or repurchase certain indebtedness, issue certain preferred stock or similar equity securities, make loans and investments, dispose of assets, incur liens, enter into transactions with

affiliates, enter into agreements restricting the ability to pay dividends, and consolidate, merge or sell all or substantially all assets.

The Indenture contains customary events of default including, without limitation, failure to make required payments, failure to comply with certain agreements or covenants, cross-acceleration to certain other indebtedness in excess of specified amounts, certain events of bankruptcy and insolvency, and failure to pay certain judgments. An event of default under the notes will allow either the trustee or the holders of at least 25% in aggregate principal amount of the then outstanding Notes to accelerate, or in certain cases, will automatically cause the acceleration of the maturity of all outstanding Notes.

Fair Value

The estimated fair value of the Company’s long-term debt as of June 30, 2021 and December 31, 2020 was approximately $1.52 billion and $1.01 billion, respectively, compared to its carrying value, excluding debt issuance costs and original issue discount, of $1.50 billion and $1.00 billion, respectively. The estimated fair value of the Company’s long-term debt was based on Level 2 inputs using quoted market prices on or about June 30, 2021 and December 31, 2020, respectively.