Exclusive: Highbridge, Partners Group in $500m mezz deal

Highbridge Principal Strategies and Partners Group recently closed on a $500 million mezzanine facility towards the merger of two network providers, Lightower Fiber Networks and Fibertech Networks, according to sources familiar with the deal. The two fiber-optic network companies merged at the end of April and were backed by several private equity firms that already had financial interests in the companies. Highbridge and Partners Group declined to comment.

The merger was an all-cash transaction valued at $1.9 billion, according to a press release from Lightower in April. Lightower’s existing financial backers, Berkshire Partners, Pamlico Capital and ABRY Partners, are providing additional equity to support the transaction, said a statement from the companies in April. The deal also included a large slice of senior debt that was arranged by a bank syndicate, sources said. Further terms were not disclosed.

The merger is expected to close in the third quarter. The combined company will be led by current Lightower chief executive Rob Shanahan. The firm will own and operate a fiber-based network throughout the Northeast, Mid-Atlantic and Midwest.

Boxborough, MA-based Lightower is a provider of custom, high-capacity network services. It serves enterprise, government, carrier and data center customers and offers 20,000 route miles of network, providing access to 8,500 service locations throughout the Northeast, Mid-Atlantic and Chicago Metro areas.

Headquartered in Rochester, N.Y., Fibertech Networks is a provider of fiber-optic based network services in 30 mid-sized service areas across the Eastern and Central US. The company owns and operates a fiber-optic network of about 12,000 route miles, which contains over 7,000 on-net locations with 4,000 cell sites. Fibertech serves wireline and wireless carriers, data centers, large enterprises and facilities in the higher education, health care and government verticals. Court Square Capital Partners is an investor in Fibertech.

New York-headquartered Higbridge is still investing its Highbridge Mezzanine Partners II fund, which the firm closed at $5 billion in March 2013. Partners Group, which runs a variety of private debt, private equity, real estate and infrastructure funds, has been getting more active in US private debt financing lately. The Zug, Switzerland-headquartered firm has its US offices in New York, San Francisco and Houston.