Zayo Group modifies term loan tranching, updates pricing

By Sara Rosenberg

New York, Jan. 12 – Zayo Group Holdings Inc. split its $2.5 billion seven-year term loan B into a $2.1 billion seven-year tranche and a $400 million four-year tranche, according to a market source.

Pricing on the seven-year loan is Libor plus 250 basis points with a 1% Libor floor and an original issue discount of 99.75, and pricing on the four-year loan is Libor plus 200 bps with no Libor floor and a discount of 99.75, the source said.

The seven-year loan has 50 bps MFN for life and the four-year loan has 100 bps MFN with an 18-month sunset.

By comparison, when the deal was structured as one term loan B, talk had been Libor plus 275 bps with a 1% Libor floor and an original issue discount of 99.75.

Morgan Stanley Senior Funding Inc., Barclays, SunTrust Robinson Humphrey Inc., RBC Capital Markets LLC, Citigroup Global Markets Inc., Goldman Sachs Bank USA and J.P. Morgan Securities LLC are the lead banks on the deal.

Commitments were scheduled to be due at 5 p.m. ET on Thursday.

Allocations are targeted for Friday, the source added.

Proceeds will be used to help fund the acquisition of Electric Lightwave for $1.42 billion in cash and to refinance an existing term loan B.

Other funds for the acquisition will come from $800 million in senior notes.

Closing is expected this quarter, subject to customary regulatory approvals and conditions.

Zayo is a Boulder, Colo.-based provider of communications infrastructure services. Electric Lightwave, formerly known as Integra Telecom, is a Vancouver, Wash.-based provider of infrastructure and telecom services.

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