Cogent Communications (CCOI) J.P. Morgan 2026 Global Leveraged Finance Conference summary

Strategic recapitalization and debt structure changes

• Plans to refinance $750 million of unsecured debt with new secured debt, using a four-step restructuring to enhance collateral quality and reduce leverage.

• $569 million in capital leases moved to a subsidiary, then sold to the infrastructure arm, converting them to operating leases and removing them from the main group's balance sheet.

• Pro forma secured leverage will be 3.91x, with $100 million additional secured capacity and $800 million unsecured capacity available but not intended for use.

• Dividend reduced by 98% and equity buybacks paused until leverage falls to 4x; current leverage stands at 6.6x.

• New secured debt will be pari passu with existing 6.5% secured notes maturing in 2032, with a planned extension of one year for new bonds.

Asset sales and capital allocation

• Proceeds from a pending LOI for the sale of 10 data centers (valued above $144 million) will be injected into the borrower group to strengthen credit, though not required by covenants.

• Data center sale is not necessary for refinancing; financing will likely occur before sale closes.

• The sale process for data centers was competitive, with multiple LOIs and backup offers; buyer selection prioritized funding certainty.

• Of 24 large, superfluous data centers, 10 are in the current sale, with hopes to sell the remainder; smaller sites are being filled with traditional colocation customers.

Operational performance and business transformation

• EBITDA grew by $70 million last year, with margins expanding by 800 basis points; future margin expansion expected at 200 basis points annually.

• The acquired Sprint business, once deeply unprofitable, is now slightly positive with low single-digit EBITDA margins.

• After purging low-margin Sprint revenue, aggregate business has returned to top-line growth, with organic business growing 27% over nine quarters.

• The company aims for 6-8% annual top-line growth and 200 basis points of margin expansion over the long term.