Zayo to start roadshow Tuesday for $3.08 billion two-part notes

By Paul A. Harris

Portland, Ore., Feb. 13 – Zayo Group Holdings Inc. plans to start a roadshow on Tuesday in New York for a $3.08 billion two-part offering of high-yield notes, according to market sources.

An investor call is scheduled to get underway at 10:30 a.m. ET on Tuesday.

The secured portion of the deal comes as a $1 billion tranche of seven-year senior secured notes (B1/B), which become callable after one year at 102 and which feature a special call that would allow the issuer to redeem 10% of the notes at 103 during the non-call period.

The unsecured portion of Zayo's offer comes as a $2.08 billion tranche of eight-year senior notes (Caa1/CCC+), which become callable after three years at par plus 50% of the coupon.

Initial guidance has the secured notes coming to yield in the mid-4% area and the unsecured paper coming to yield in the high 6% area, a trader said.

The roadshow moves to Boston on Feb. 20, and the Rule 144A and Regulation S offering is also expected to price on Feb. 20.

Lead left bookrunner Morgan Stanley & Co. LLC will 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 are the joint bookrunners.

BNP Paribas Securities Corp., Citizens Capital Markets Inc., Fifth Third Securities Inc., ING Financial Markets LLC, MUFG, Natixis Securities Americas LLC, Nomura Securities International LLC and Scotia Capital (USA) Inc. are the co-managers.

Proceeds will be used to help fund the leveraged buyout of Zayo by Digital Colony Partners and the EQT Infrastructure IV fund.

The issuing entity 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.

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