Zayo Group, a regional provider of fiber-based bandwidth, telecom and wholesale voice solutions, announced at the COMPTEL PLUS Convention & Expo in Dallas that Morgan Stanley Alternative Investment Partners has joined Zayo’s existing equity group to raise a combined $128 million of new equity associated with first and second closings.
The first closing for the round of equity financing was announced on Feb. 12, 2009. Charlesbank Capital Partners led the Series B round and, as part of the first closing, all of Zayo’s existing equity investors increased their investment in Zayo. Zayo’s equity syndicate now consists of Battery Ventures, Centennial Ventures, Charlesbank Capital Partners, Columbia Capital, M/C Venture Partners, Morgan Stanley AIP and Oak Investment Partners.
Zayo’s revenue is approximately $200 million and its earnings before interest, taxes, depreciation and amortization (EBITDA) is approximately $60 million. Zayo is net income positive and, beginning in the second quarter of 2009, is expected to be free cash flow positive. Prior to the Series B round, Series A equity was $186 million. The Series B round consisted of an additional Series A investment of $33 million, bringing the total amount of the Series A facility to $219 million. The size of the Series B facility is $95 million. This capital will be drawn into Zayo only as needed. Zayo has $137 million of bank debt and with a cash balance of approximately $37 million, Zayo’s net debt is approximately $100 million.
