Zayo was founded in 2007 in order to take advantage of the favorable Internet, data, and wireless growth trends driving the demand for bandwidth infrastructure, colocation and connectivity services. These trends have continued in the years since our founding, despite volatile economic conditions, and we believe that we continue to be well-positioned to continue to capitalize on those trends. To address the demand, we have assembled a large portfolio of fiber networks and colocation assets through both acquisitions and customer demand driven investments in property and equipment. From our inception through the fourth fiscal quarter of 2013, we have completed many acquisitions and asset purchases for an aggregate purchase consideration, net of cash acquired, of $3,305.2 million. During that period, we have invested $730.4 million in purchases of property and equipment. Our investments in acquisitions, asset purchases and purchases of property and equipment were in part funded with $726.1 million of equity capital.
Zayo's Acquisition and Financing History
On May 16, 2014, Zayo acquired Geo Networks Ltd (“Geo”)", a London-based dark fiber provider. Geo owns and operates a high-capacity fiber network in the UK, providing managed networks, dark fiber and co-location services. The Geo acquisition will significantly increase Zayo’s fiber footprint in the UK, adding over 1,800 miles of national fiber connecting 130 data centers, telehouses and key internet exchanges. It also will provide direct access to major cities including Manchester, Birmingham and other significant commercial regions. In addition to enhancing Zayo’s UK network, Geo’s fiber enables Zayo to establish a presence in Ireland through the diverse optical fiber subsea system, East-West Ring, providing diverse connectivity to Dublin, a strategic hub for data centers and cloud service providers.
On April 28, 2014 Zayo signed a definitive agreement to acquire Neo Telecoms (“Neo”), a Paris-based Bandwidth Infrastructure company. The acquisition adds many route miles of Dark Fiber and more than 500 on-net buildings to Zayo’s network. Neo also operates 9 colocation centers across France, offering more than 36,000 square feet of data center space. The Paris and regional network throughout France will be integrated into Zayo’s existing European network connecting London, Frankfurt and Amsterdam and the U.S.
In March, zColo, the colocation division of international Bandwidth Infrastructure provider Zayo Group, LLC (“Zayo”), acquired CoreXchange, Inc., a data center, bandwidth and managed services provider in Dallas, Texas. The purchase adds one new data center, located at 8600 Harry Hines Blvd, to the zColo portfolio. In addition, zColo will secure an additional 12,000 square feet in CoreXchange’s suite at its existing data center in the Dallas Infomart at 1950 N. Stemmons Freeway.The acquisition yields over 18,000 square feet of total data center space and brings zColo’s national data center count to 27 locations. As a part of the acquisition, Zayo will also assume ownership of ColoUnlimited, CoreXchange’s online presence that facilitates simple, real-time online sales and ordering of colocation services.
In May, Zayo successfully completed the amendment of its credit agreement, including a $275 million add-on to its term loan facility. The $1.74 billion term loan facility was increased by the $275 million to $2.015 billion. A portion of the offering proceeds were used to repay Zayo’s $150 million of borrowings on its revolving credit facility, which was drawn to help fund its previously announced acquisition of Geo Networks Ltd. The remaining proceeds will be used to fund the acquisition of Neo Telecoms Group, which is expected to close on July 1, 2014.
Zayo completed the acquisition of Core NAP, an Austin-based data center operator on May 31, 2013. With this acquisition, the company has expanded the data center facility offering to 21 locations, including the 7218 McNeil Drive colocation. The latest Tier-3 data center offers carrier-neutral colocation to enterprise customers and compliments Zayo's recent 2012 expansion of metro and long haul services throughout the Austin area. On October 2, 2013, Zayo completed the purchase of Access Communications, Inc. The Access Communications, Inc., includes a 1,200-mile metropolitan fiber network, covering the greater Minneapolis-St. Paul metropolitan area. It connects more than 500 on-net buildings, including the area’s major data centers and carrier hotel facilities. On October 7, 2013, Zayo announced its acquisition of FiberLink, LLC (“FiberLink”), a Midwest-based darkfiber operator. FiberLink is routed between Chicago and Denver, covering over 1,200 miles of network. With this acquisition, Zayo offers approximately 26,000 routes miles of dark fiber with associated colocation and technical support.
On July 2, 2012, Zayo Group completed the financing of $3.3 billion in equity and debt in conjunction with the close of its acquisition of AboveNet and the refinancing of all current Zayo and AboveNet debt. The funding consisted of $472 million in equity and $2.87 billion of new debt plus, a new $225 million revolving credit facility. GTCR LLC, a leading Chicago-based private equity firm, led the Series C round of equity financing. Several existing investors also made incremental investments. The debt includes a $1.62 billion term loan due in 2019, $750 million of 8.125% Senior Secured First-Priority Notes due in 2017, and $500 million of 10.125% Senior Unsecured Notes due in 2020. Earlier, in May of this year, Zayo announced it had completed its transaction to purchase Arialink, bolstering its fiber networks in the Lansing and Ann Arbor, Michigan areas. Zayo also announced in June that it had executed a definitive agreement to acquire FiberGate, Inc., adding 130,000 fiber miles to Zayo’s metro network in and around the greater Washington D.C. area. Zayo announced the acquisition of USCarrier in August and closed the deal in October. Later in October, the company announced the acquisition of First Telecom Services. Before year's end, Zayo also executed an agreement to acquire Baltimore, Maryland-based Litecast/Balticore, LLC, a provider of metro Bandwidth Infrastructure services, for $22 million.
In December of 2011, Zayo Group announced that it had completed its latest round of debt fund raising totaling $315 million in a five-year term loan. The loan was marketed by RBC Capital Markets, Barclays Capital and SunTrust and allocated to 25 institutional investors. Initially marketed for $295 million, strong demand for the instrument led to upsizing the amount. The funds were used to complete the announced $345 million acquisition of 360networks, with the remainder of the purchase price and transaction expense funded by cash on hand. The 360networks acquisition was transformative in that it tied together Zayo’s unique western metro markets to create a nationwide fiber network. At the end of 2011, Zayo acquired the MarquisNet data-center business in Las Vegas, complementing its robust Las Vegas fiber network.
In March of 2010, Zayo Group issued $250 million in first lien senior secured notes in anticipation of its acquisition of AGL Networks. A portion of the proceeds were used to repay all outstanding amounts under the company’s former credit agreements. Morgan Stanley and Royal Bank of Canada were joint book-running managers on the offering while Barclays, Oppenheimer and SunTrust Robinson Humphreys served as co-managers. The Notes were issued to pay at an interest rate of 10.25% and mature in 2017. In September 2010, Zayo completed $100 million tack-on to the $250 million Senior Secured Notes. The company used a portion of the proceeds to fund the acquisition of American Fiber Solutions. Additionally in 2010, Zayo acquired Dolphini’s Cummins Station data center and colocation services, bringing the total number of acquisitions to date to fifteen.
In March of 2009, Zayo Group announced a total of $128 million of new equity had been raised in its Series B round of equity financing. The first closing of the round was announced on February 12th, with Charlesbank Capital Partners leading the round in addition to all of Zayo’s existing equity investors increasing their investment in the company. Morgan Stanley Alternative Investment Partners (Morgan Stanley AIP) joined to round out the total. At this time, Zayo’s equity syndicate consisted of Battery Ventures, Centennial Ventures, Charlesbank Capital Partners, Columbia Capital, MC Partners, Morgan Stanley AIP, and Oak Investment Partners. In September of 2009, Zayo announced an additional debt raise of $30 million. CoBank, Royal Bank of Canada and SunTrust acted as financial advisors and provided the debt capital in the form of a term loan. The financing was used to partially fund Zayo’s acquisition of FiberNet Telecom Group, Inc.
In March of 2008, Zayo Group closed on $30 million in debt financing, once again led by CIT with support from CoBank and Hercules Technology Growth Capital, Inc. The incremental debt allowed for the company’s acquisition of Citynet Fiber Network (CFN), the wholesale division of integrated communications provider, Citynet. This increased the total debt facility raised by Zayo to $115 million to date. In October of 2008, Zayo locked in on a $35 million debt facility, maintaining its ability to secure debt financing in a tumultuous economy. The new funding provided for the finalization of previously announced agreements to acquire Columbia Fiber Solutions, select assets of Adesta Communications, multiple fiber networks from Citynet and Northwest Telephone (in two transactions over 2008 and 2009). The addition of those three, and that of select assets of CenturyTel in July of that year, brought Zayo’s acquisitions count to nine by the end of 2008. To date, Zayo’s network spanned 19,645 miles, serving 1,650 on-net locations in 128 markets across 23 states. The incremental term debt would also allow Zayo to fund future mergers and acquisitions, while increasing its capital program in 2009.
In August of 2007, Zayo Group held its Series A Round of investing and raised $225 million in private equity funding led by Oak Investment Partners, Columbia Capital and MC Partners. Other investors included Colorado-based Centennial Ventures and Battery Ventures. Later that year, Zayo secured an $85 million debt facility in a round of financing led by CIT Group Inc. Also involved were CoBank and Hercules Technology Growth Capital, Inc. as co-sponsors of the facility. The funding, coupled with the $225 million raised earlier in the year provided Zayo sufficient capital to support its overall growth strategy and acquisitions of fiber-based communication businesses. By the end of the year 2007, Zayo had made five acquisitions: Memphis Networx, PPL Telcom, Indiana Fiber Works, VoicePipe and Onvoy Inc.