Zayo Pockets $128M

Morgan Stanley Alternative Investment Partners joins existing equity group to raise a combined $128M

March 3, 2009

2 Min Read

LOUISVILLE, Colo. -- Zayo Group, a regional provider of fiber basedbandwidth, telecom and wholesale voice solutions, announced today that Morgan StanleyAlternative Investment Partners (Morgan Stanley AIP) has joined in a second closing tocomplete its recently announced Series B round of equity financing. In total, $128M of newequity was associated with the first and second closings.

The first closing for the round of equity financing was announced on February 12th.Charlesbank Capital Partners led the Series B round and, as part of the first closing, all ofZayo’s existing equity investors increased their investment in Zayo. Zayo’s equity syndicatenow 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 $200M and its EBITDA is approximately $60M. Zayo is netincome positive and, beginning in 2Q09, is expected to be free cash flow positive. Prior tothe Series B round, Series A equity was $186M. The Series B round consisted of anadditional Series A investment of $33M, bringing the total amount of the Series A facility to$219M. The size of the Series B facility is $95M. This capital will be drawn into Zayo onlyas needed. Zayo has $137M of bank debt and drawn revolver. With a cash balance ofapproximately $37M, Zayo’s net debt is approximately $100M.

“We are delighted that Morgan Stanley AIP wanted to participate in providing the financialresources to help Zayo’s continued success” said Ken desGarennes, CFO of Zayo Group.“Our current business is predictable and growing, so we will not need these funds to operateour business. However, these additional funds can support strategic acquisitions of othertelecom companies and major expansions to assist our current and future customers.”Dan Caruso, CEO of Zayo Group, explained: “Having Morgan Stanley AIP join our existingequity group is a significant step for Zayo Group. Just as individuals are known by thecompany they keep--so companies are known by their investors. Our investment equitygroup, now including Charlesbank Capital Partners and Morgan Stanley AIP, provides ZayoGroup with a unique opportunity to accomplish acquisitions and mergers during this volatileeconomic period. We appreciate our equity group’s confidence in our business model and inour future growth. We also appreciate the ongoing support we are receiving from our debtsponsors.”

Zayo Group Inc. (NYSE: ZAYO)

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