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Blackstone, banks decline to comment

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More than 10 banks are taking part in the deal

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AirTrunk price more than 20 times projected earnings -

sources

By Kane Wu, Scott Murdoch and Renju Jose

HONG KONG/SYDNEY, Sept 5 (Reuters) - A Blackstone-led

consortium is taking out an around $A5.5 billion ($3.7

billion) loan package to help fund the A$24 billion AirTrunk

buyout, two sources with direct knowledge of the matter said, as

the U.S. firm increases its Asian exposore.

Blackstone said on Wednesday it had partnered with Canadian

Pension Plan Investment Board (CPP Investments) to buy AirTrunk,

which is considered Asia Pacific's largest hyperscale data

centres business.

Investors have flocked to the sector as artificial

intelligence drives demand for capacity, and the financing

package would be the second largest acquisiton loan in the

region this year, according to Dealogic data.

It comprises a A$2 billion term loan and a A$3.5 billion

revolving credit facility, according to the sources who could

not be named discussing private information.

Blackstone declined to comment.

More than 10 banks are participating in the loan syndicate,

including Credit Agricole, Deutsche Bank, Morgan Stanley and

Japan's MUFG, the sources said.

Credit Agricole, Deutsche Bank and MUFG declined to comment.

Morgan Stanley did not respond to a Reuters request.

The financing would cover up to 50% of Blackstone's equity

investment in the deal, said one of the sources, while the

overall deal value includes AirTrunk's debt and its capital

expenditure for committed projects.

HIGH PRICE

The consortium's purchase price would be over 20 times

AirTrunk's projected earnings before interest, taxes,

depreciation, and amortisation (EBITDA), the sources said.

The loan would seem highly leveraged in a typical buyout,

but lenders are taking into account AirTrunk's estimated growth

and cash flow in the next few years, based on its contracts, the

sources said.

AirTrunk borrowed around A$4.6 billion from more than 30

lenders last year and that debt will be rolled over after the

acquisition, the sources said.

AirTrunk's value increased during the sales process, which

officially began in March, due to the increasing usage of AI

which requires greater data centre capacity.

CPP Investments said in a statement on Wednesday it would

hold 12% of AirTrunk once the deal was finalised.

AirTrunk's founder and chief executive Robin Khuda will

continue to lead the Sydney-based firm and keep an unspecified

stake once the deal is finalised.

Khuda, 45, who came to Australia from Bangladesh when he was

18 to do an accounting course at the University of Technology in

Sydney, built the A$24 billion data centre business in less than

a decade.

"Our journey has never been easy, we've faced so many

adversities, and we always came out stronger and more

resilient," Khuda said in a post on LinkedIn. He has admitted

using retirement savings to save the business and contemplated

bankruptcy.

"It was Christmas 2016 and I had to deliver our first data

centre by September 2017 ... we got to the point where we had

run out of money. I even took money from my superannuation fund

so that was naughty of me," he told an Australian Financial

Review Business Summit in March.

"I even rang up my lawyer and said I needed insolvency

advice."

His LinkedIn profile lists his three-year stint at data

centre operator NextDC ( NXDCF ) as Deputy CEO and executive

director but omits his CEO role at mobile payments firm Mint

Wireless, which he quit after six months.