According to a reliable source from within metro and regional fiber operator Zayo Group , the company has again defied the credit crisis and raised a significant amount of new capital. This is the second time the company has raised money during the teeth of the recession, they added 35M at the end of September apparently as a cushion for the impending recession. Any money raised now is surely expensive money, valuations are very low and available interest rates for corporate debt are high even for large profitable companies. Supposedly, the money is not slated for day to day operations, their balance sheet is in good shape. That of course raises the question: then what is it for?
With a history like Zayo’s, one can only assume there is M&A involved. They have rolled up eleven fiber assets over the last two years, the latest being a second purchase from Citynet. Zayo wouldn’t raise this money unless they saw a target (or targets) that are particularly attractive, they are busy enough integrating what they have this year. Hmmm, so what fiber assets out there are ripe for the picking, and probably less than $100M to buy? Zayo has consistently found such assets in places outside my own depth, so who knows really. I’m still of the opinion that midwestern fiber operator US Signal needs a home, and it would be a nice fit with Zayo’s other assets – so that’s my guess by default.
No doubt Zayo’s Dan Caruso will have something to say over on Bear On Business when the announcement comes in the next few days, maybe he will give us a few hints again.
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