By Paul A. Harris
Portland, Ore., Feb. 20 – Zayo Group Holdings Inc. placed a downsized $2.58 billion of high-yield notes in two tranches on Thursday, according to market sources.
The secured portion of the deal saw an upsized $1.5 billion tranche of seven-year senior secured notes (B1/B) price at par to yield 4%. The secured tranche was upsized from $1 billion. The yield printed at the tight end of the 4% to 4¼% yield talk and well inside of earlier guidance in the 4½% area.
The unsecured portion saw a downsized $1.08 billion tranche of eight-year senior notes (Caa1/CCC+) price at par to yield 6 1/8%. The unsecured tranche was downsized from $2.08 billion. The yield printed at the tight end of yield talk in the 6¼% area and deep inside of earlier guidance in the 6¾% area.
Lead left bookrunners were Morgan Stanley & Co. LLC (bill and deliver), Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., SunTrust Robinson Humphrey Inc. and TD Securities (USA) LLC.
Despite the fact that the overall amount of bonds sold decreased by $500 million, from the original overall size of $3.08 billion, demand across both tranches of bonds was massive, sources said.
With the downsizing of the bonds the company upsized its U.S. seven-year covenant-lite first-lien term loan to $4.75 billion from $4.235 billion.
Ultimately around $1 billion shifted to the secured notes and loan from the unsecured bonds, reflecting demand, a trader said.
Of the bonds and the loan, investors noted that the loan afforded more lender protection than did the secured bonds, the source added.
Proceeds from the notes, the U.S. term loan and a €750 million term loan will be used to help fund the leveraged buyout of Zayo by Digital Colony Partners and the EQT Infrastructure IV fund.
The issuing entity for the notes will be Front Range BidCo, Inc., which is to be merged with and into Zayo, a Boulder, Colo.-based provider of mission-critical bandwidth to companies.
| Issuer: | Front Range BidCo, Inc. to be merged with and into Zayo Group Holdings, Inc.
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| Amount: | $2.58 billion, decreased from $3.08 billion
|
| Lead left bookrunners: | Morgan Stanley & Co. LLC (bill and deliver), Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., Deutsche Bank Securities Inc., SunTrust Robinson Humphrey Inc. and TD Securities (USA) LLC
|
| Co-managers: | BNP Paribas Securities Corp., Citizens Capital Markets Inc., Fifth Third Securities Inc., ING Financial Markets LLC, MUFG, Natixis Securities Americas LLC, Nomura Securities International Inc. and Scotia Capital (USA) Inc.
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| Trade date: | Feb. 20
|
| Settlement date: | March 9
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| Distribution: | Rule 144A and Regulation S for life
|
| Marketing: | Roadshow
|
|
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| Senior secured notes
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| Amount: | $1.5 billion, increased from $1 billion
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| Maturity: | March 1, 2027
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| Coupon: | 4%
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| Price: | Par
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| Yield: | 4%
|
| Spread: | 255 bps
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| Call protection: | One year
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| Ratings: | Moody's: B1
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| S&P: B
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| Price talk: | 4% to 4¼%
|
|
|
| Senior unsecured notes
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| Amount: | $1.08 billion, decreased from $2.08 billion
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| Maturity: | March 1, 2028
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| Coupon: | 6 1/8%
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| Price: | Par
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| Yield: | 6 1/8%
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| Spread: | 465 bps
|
| Call protection: | Three years
|
| Price talk: | 6¼% area
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