News
The company plans to use proceeds to accelerate network builds and invest in service reliability and customer experience, Surf Internet said.
Edited by Brad Randall, Broadband Communities
Surf Internet has closed a $407 million asset-backed securitization (ABS), the company said Wednesday, marking its first foray into securitized finance as it aims to accelerate fiber network expansion across the Great Lakes region.
The deal, executed through a newly formed bankruptcy-remote subsidiary called Surf ABS Issuer LLC, consists of $332 million in term notes backed by fiber network revenue plus a $75 million variable funding note facility.
The term notes were issued in multiple tranches, including investment-grade Class A-2 notes rated A-, Class B notes rated BBB, and unrated Class C notes placed at higher leverage than comparable consumer fiber ABS transactions. Surf said the offering drew several times oversubscription, with strong interest from asset managers, insurers and credit funds, and was tightly priced relative to sector peers.
“This inaugural ABS transaction represents an important milestone in Surf’s continued evolution as a scaled and disciplined super-regional fiber platform,” said Ryan Delack, Surf’s chief financial officer. Delack framed the financing as a way to enhance “financial flexibility” and support “long-term value creation,” noting that the company plans to use proceeds to accelerate network builds and invest in service reliability and customer experience.
Buyers and advisers also framed the deal as a vote of confidence in Surf’s assets. “Surf’s ability to execute this transaction reflects the quality of its network assets and the depth of demand for its services,” David Haswell, a director at Bain Capital, said in a statement. Goldman Sachs served as sole structuring and placement agent for the transaction; legal work for Surf was handled by Kirkland & Ellis, while Ropes & Gray represented investors and the placement agent.
Surf Internet, headquartered in Elkhart, describes itself as a regional fiber provider serving parts of Illinois, Indiana and Michigan with a workforce of more than 350. The company has been focusing on underserved and rural communities and lists several local offices across the three states. The new financing is likely to intensify a broader push by regional fiber operators to tap capital markets for funding large-scale buildouts as demand for high-speed broadband grows.
Some AI tools assisted in the crafting of this report.
