Today, Zayo Group disclosed that it has lined up $128M of additional equity backing. Morgan Stanley Alternative Investment Partners joined Zayo Group’s equity syndicate. An extract from the press release explains Zayo’s capitalization:
Zayo’s revenue is approximately $200M and its EBITDA is approximately $60M. Zayo is net income positive and, beginning in 2Q09, is expected to be free cash flow positive. Prior to the Series B round, Series A equity was $186M. The Series B round consisted of an additional 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 only as needed. Zayo has $137M of bank debt and drawn revolver. With a cash balance of approximately $37M, Zayo’s net debt is approximately $100M.
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. Its debt sponsors are CIT, CoBank, Hercules Technology Growth Capital, Royal Bank of Canada, and SunTrust Bank. I appreciate the support of all of these investors–without it, the new equity would not have been raised.
Raising equity in this macro-economic meltdown is difficult. Two of the reasons Zayo was able to raise money are (a) its financial performance and (b) its competency in operational finance. Many bearonbusiness readers have followed this blog for a while. You know I get into the mundane topic of the importance of accurate and thorough forecasts. Accurate forecasts are only possible if a company has an excellent quantitative handle on its day to day business. The combination of being able to present a comprehensible picture of what has happened AND a credible prognosis of the future played a major role in our financing.
Zayo Team: I know we have pushed hard in the past year or two. It is because of your efforts, and the support of our customers, that we were successful in raising the money. Our financial thoroughness–starting with sales forecasting, continuing with service activation and disconnects, and progressing through the forecasting of the balance sheet and free cash flow–positioned us to raise money. Thank you for selling, activating service, providing great service, and managing our cost structure.
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Congrat’s to you all!
That is an outstanding accomplishment in this market. Congrats.