Zayo to launch $1.25 billion of secured, unsecured notes next week

By Paul A. Harris

Portland, Ore., June 4 - Zayo Group LLC is expected to bring a $1.25 billion offering of high-yield notes to market during the June 11 week, sources said.

The bonds, backing the acquisition of AboveNet Inc., are expected to come in two tranches: a $750 million tranche of senior secured notes and a $500 million tranche of senior unsecured notes.

Morgan Stanley & Co. LLC and Barclays Capital Inc. are the leads in a syndicate of banks that includes SunTrust Robinson Humphrey Inc., UBS Securities LLC, RBC Capital Markets LLC and Goldman Sachs & Co.

The financing also includes a $1.75 billion credit facility, which will launch at a Wednesday bank meeting.

In addition to funding the acquisition, proceeds from the bonds and bank loan will be used to refinance debt at both companies.

Other funds for the transaction will come from $290 million of equity from GTCR and Charlesbank Capital Partners and cash on hand.

Under the agreement, Zayo is buying AboveNet for $84 per share in cash. The acquisition is valued at about $2.2 billion.

Closing is expected mid-year, subject to customary approvals.

Zayo is a Louisville, Colo.-based provider of fiber-based bandwidth infrastructure and network-neutral colocation and interconnection services. AboveNet is a White Plains, N.Y.-based provider of high bandwidth connectivity services for businesses and carriers.

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