News and Analysis
Zayo plots new debt raise at European entity after proposed separation
- Rachel Butt
- +Ryan Daniel
•2 min read
Zayo is working with banks to help gauge investor interest in raising new debt at its Zayo Europe subsidiary, which was proposed to be carved out from the company in May, according to 9fin sources.
The fiber network company is considering raising $750m to $900m of new bonds and loans, sources said. It is then looking to retain $100m-$200m of the potential proceeds at the European entity and send the rest to the US subsidiary to repay the revolver due March 2025, sources said.
The efforts come after Zayo announced that it is separating its European assets — with a newly appointed CEO — to spur growth in Western European markets.
Zayo’s proposed carve out would would be modestly deleveraging and help improve its liquidity in the near term, according to S&P’s note on 17 May.
As of 31 March, Zayo had roughly $253m of liquidity, including $80m of cash and $173m of revolver availability. It is expecting negative operating cash flow of $150m to $200m this year, which S&P specifically suggested could be alleviated with a new debt raise at the European entity.
Backed by DigitalBridge and EQT Partners, Zayo has been seeking ways to address its $9bn debt stack amid high leverage and cash flow pressures.
Quotes on Zayo's $4.75bn term loan due 2027 are at roughly 88 cents on the dollar, while its $1.5bn 4% secured notes due 2027 are at 80 cents, according to 9fin data.
Representatives at Zayo and DigitalBridge didn’t respond to requests for comment. EQT declined to comment.
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