Commentary & Deal Flow

Zayo Group has updated the tranche sizes of its bond deal and term loan shifting $1bn from the sr unsec tranche to the sr sec loan and bond tranches ($500m to the notes and $500m to the term loans).

The 7y sr sec term loan total size has been increased to US$5.56bn (up from $5.06bn), consisting of US$4.75bn (up from US$4.235bn) and US$810m (down from US$825m) EUR equivalent sr sec term loans.

The bond deal total size has been decreased to $2.58bn (down from $3.08bn), consisting of $1.5bn (up from $1bn) 7yNC1 sr sec 1st lien notes and $1.08bn (down from $2.08bn) 8yNC3 sr notes.

The rest of the bond details remain: Zayo Group Holdings Inc (Front Range Bidco) (ZAYO) $2.58bn (down from $3.08bn notes) 144A/Reg S 2-part. Via MS/CS/Citi/DB/STRH/TD joint books, BNPP, Citizens, FITB, ING, MUFG, Natixis, Nomura, Scotia as co-managers. No reg rights. SMR at 100 if the acquisition is not completed by 08/14/20.

- $1.5bn (up from $1bn) sr sec 1st lien notes due 2027 (7y). NC1 (MWC T+50bp) (102, par). Equity claw: 1y 40%. Special call: up to 10% the 1st year at 103. B1/B (stable/stable). IPT mid 4s.

- $1.08bn (down from $2.08bn) sr unsec notes due 2028 (8y). NC3 (MWC T+50bp) (par +50% of coupon). Equity claw: 3y 40%. Caa1/CCC+ (stable/stable). IPT high 6s.

Roadshow 02/18-20 (Tues NYC, investor call at 10:30am; Weds 1x1 calls, Thurs Boston). Pricing Thurs, 02/20. (Bank loan meetings were held NY Feb 05, London Feb 06). UOP: along with $250m cash on hand, US$4.75bn (up from US$4.235bn) and US$810m (down from US$825m) EUR equivalent sr sec term loans ($750m multi-currency revolver) via CS/MS/Citi/DB/STRH/TD+, to fund the acquisition of ZAYO, by Digital Colony Partners and EQT Infrastructure IV fund for $35 per share in cash or total transaction value of $14.3bn, including the assumption and/or repayment of $5.9bn of Zayo's net debt (Uses of funds $8.376bn cash for merger consideration, $3.894bn repurchase of Zayo notes, $1.806bn refi existing credit faciliites, $400m fees & expenses, $414bn cash to the B/S). On 01/17 Front Range Bidco commenced a tender offer for Zayo's $1.43bn 6% sr notes due 2023, $900m 6.375% sr notes due 2025 and $1.65bn 5.75% sr notes due 2027 (total consideration on all three is $1,020, includes $30 early participation premium, CS/MS joint dealer managers). The sponsors will contribute $6.5bn in equity financing. Closing is expected in late Q1 or early Q2 2020. Biz: provides communication infrastructure services and products, including fiber and bandwidth connectivity, colocation and cloud infrastructure, to businesses primarily in the US, Canada and Europe. HQ: Boulder, CO. (Acquisition announced 05/08/19).