Surf Internet Secures Upsized $200 million Debt Facility to Support Continued Network Expansion Across the Great Lakes Region
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Insights
The securing of a $200 million debt facility by Surf Internet, led by DigitalBridge Credit and involving entities such as CPP Investments and Boundary Street, is a significant financial maneuver aimed at bolstering the company's strategic growth plan. This move effectively doubles the previous debt facility, indicating a robust confidence from lenders in Surf Internet's business model and expansion strategy. The capital infusion is earmarked for the accelerated deployment of fiber-optic networks to underserved communities, a sector that is witnessing increasing demand due to the critical need for high-speed internet connectivity.
For stakeholders, the short-term implications include the potential for increased operational capabilities and market penetration for Surf Internet, which could translate to enhanced revenue streams. In the long-term, the establishment of a more extensive fiber network could solidify the company's competitive position in the region and potentially lead to market share gains. However, there are inherent risks associated with taking on additional debt, including increased interest obligations and the pressure to deliver on expansion promises to justify the leverage.
Investors should monitor the company's ability to manage this debt effectively and execute its expansion plans efficiently. The success of this strategy could serve as a bellwether for similar investments in digital infrastructure within the industry.
The expansion of fiber-to-the-premise (FTTP) services by Surf Internet represents a strategic move in an industry where high-speed internet access is becoming a utility rather than a luxury. The involvement of specialized investment partners such as DigitalBridge Credit and CPP Credit Investments underscores the attractiveness of investing in digital infrastructure, which is seen as a stable and growing sector.
Given the current industry trend towards digital transformation and the increasing reliance on cloud-based services and remote work, the demand for reliable high-speed internet is likely to continue to grow. Surf Internet's initiative to nearly double its fiber passings in 2024 could position the company to capitalize on this demand. However, the success of this expansion will hinge on the company's ability to deploy capital efficiently and manage the complexities associated with large-scale infrastructure projects.
From an industry perspective, Surf Internet's growth could prompt other regional service providers to consider similar expansions, potentially leading to increased competition and innovation in the sector. The company's ability to execute its strategy will likely influence investor sentiment towards the broader digital infrastructure market.
The infusion of $200 million in incremental debt capital into Surf Internet can be viewed as a positive economic indicator for the Great Lakes Region. The deployment of advanced fiber-optic networks is expected to stimulate economic activity by providing the necessary infrastructure for businesses and consumers to participate in the digital economy. This could lead to job creation, both directly through construction and maintenance of the network and indirectly by enabling remote work and e-commerce.
However, the project's economic impact will also depend on the efficiency and timeliness of the deployment. Delays or cost overruns could diminish the expected benefits and increase the financial strain on Surf Internet. Additionally, the long-term economic benefits will be influenced by the adoption rates of the new fiber services and the resulting improvements in productivity and innovation.
From a macroeconomic standpoint, increased access to high-speed internet in underserved areas could help reduce the digital divide, contributing to more equitable economic growth. The role of large-scale infrastructure investments in driving regional development is well-documented and Surf Internet's expansion could serve as a catalyst for further investment in the region.
- Lending group led by DigitalBridge Credit to provide incremental debt capital to support the accelerated deployment of fiber to underserved communities across the
Great Lakes Region - Increases debt facility by
$100 million
The upsizing will double the existing
"We are thrilled to enter the next phase of accelerated expansion with continued support from our highly experienced digital infrastructure investment partners who all share our vision for building Surf into one of the leading fiber-to-the-premise (FTTP) providers in the country," said Gene Crusie, CEO of Surf Internet.
"We are pleased to continue our partnership with DigitalBridge Credit and CPP Credit Investments, as well as bringing in our new partner, Boundary Street, through this meaningful debt upsizing. Our lending partners have been steadfast in their conviction in Surf Internet, alongside our equity partners, Bain Capital and Post Road Group, who remain committed to our growth strategy," added Ryan Delack, CFO of Surf Internet.
The incremental capital will support Surf's plan to expand its network while strengthening its multigig capabilities. Surf has a strong pipeline of attractive build opportunities to nearly double its fiber passings in 2024.
"We are proud to partner with CPP Credit Investments and Boundary Street in accelerating the deployment of fiber-to-the-premise buildouts, driven by a strong demand for connectivity," said Chris Moon, Managing Director at DigitalBridge Credit. "We are excited to contribute to this next phase of growth and value creation, continuing our support for Gene, Ryan, and the entire team at Surf Internet."
The transaction closed on December 12, 2023. Houlihan Lokey served as exclusive financial advisor and placement agent to Surf Internet and Kirkland & Ellis LLP served as legal counsel. White & Case LLP served as legal counsel to DigitalBridge Credit as the lead lender.
About Surf Internet
Surf Internet is an innovative fiber-optic internet company that serves as the essential gateway to connectivity across the
About DigitalBridge
DigitalBridge Group, Inc. (NYSE: DBRG) is a leading global digital infrastructure investment firm. With a heritage of over 25 years investing in and operating businesses across the digital ecosystem including cell towers, data centers, fiber, small cells, and edge infrastructure, the DigitalBridge team manages a
About CPP Investments
Canada Pension Plan Investment Board (CPP Investments™) is a professional investment management organization that manages the Fund in the best interest of the more than 21 million contributors and beneficiaries of the Canada Pension Plan. In order to build diversified portfolios of assets, investments are made around the world in public equities, private equities, real estate, infrastructure and fixed income. Headquartered in
About Boundary Street Capital
Boundary Street is a unique private credit investment manager focused on providing flexible capital solutions specifically to lower middle market technology and telecommunications businesses and backed by a team of investment professionals with decades of experience investing in these sectors. Boundary Street seeks to invest credit in durable, recurring revenue businesses providing the mission critical services that will drive economic growth, bridge the digital divide, and keep families and businesses connected. The firm's access to unique cost-effective committed capital positions Boundary Street to support American business while providing attractive risk-adjusted returns for our investors. To learn more, visit www.boundarystreetcapital.com
About Bain Capital
Bain Capital, LP is one of the world's leading private multi-asset alternative investment firms that creates lasting impact for our investors, teams, businesses, and the communities in which we live. Since our founding in 1984, we've applied our insight and experience to organically expand into numerous asset classes including private equity, credit, public equity, venture capital, real estate and other strategic areas of focus. The firm has offices on four continents, more than 1,500 employees and approximately
About Post Road Group
Post Road Group is an alternative investment advisory firm with over
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SOURCE Surf Internet
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