Cincinnati Bell announced a plan to sell US$500m in stock of its colocation services business CyrusOne to “qualified institutional investors”, guaranteeing the notes by CyrusOne and some of its subsidiaries.

Cincinnati Bell, which bought Texas-based CyrusOne for $525m in 2010, filed for an initial public offering of a portion of the colocation business with the US Securities and Exchange Commission in August.

It said it would use proceeds from the sale to repay CyrusOne’s outstanding debt to its parent company.

The colocation business contributed $57m to Cincinnati Bell’s total revenue of $368m reported for the third quarter. CyrusOne’s revenue was up 20% year over year.

The parent company also received a ruling from authorities in favor of its request to spin CyrusOne off as a real-estate investment trust (REIT).

The third quarter marked a massive capacity expansion for CyrusOne in its native Texas. The company finished construction on a total of 95,000 sq ft of data center space across sites in Dallas, San Antonio and Houston.

The company now has nearly 900,000 sq ft of data center space total. During the third quarter, it sold 11,000 sq ft of space, which brought its space utilization rate to 78% at the end of the three-month period.