Moody's rates Zayo add-on loan B1

Moody's Investors Service said it rated Zayo Group, LLC's proposed $150 million term loan add-on B1 (LGD3-41%).

This transaction will increase the size of the company's existing term loan B due 2019 to $1.75 billion from $1.6 billion. The proceeds will be used for general corporate purposes.

Moody's said the higher debt load resulting from this transaction will temporarily stress Zayo's leverage metrics beyond the limit of the current B2 corporate family rating.

Proforma for this transaction, Zayo will have about $240 million of cash on the balance sheet. Higher leverage will reduce Zayo's financial flexibility and any use of proceeds that is not EBITDA accretive will negatively impact the company's ratings, the agency said.

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