Waste Services is in talks with its banks to obtain a waiver after violating covenants. The waiver will enable it to access funds from its revolver, which it cannot draw at the moment. Lehman Brothers, CIBC World Markets and Bank of America lead the bank debt, consisting of a five-year $60 million revolver and seven-year, $100 million term loan facility. Mark Pytosh, executive v.p. of Waste Services, did not return calls.
The bank debt has been downgraded by Moody's Investors Service to Caa1 from B1. The downgrade was prompted by the rapid decline over the last quarter in expected operating performance and cash generation; the company's impaired liquidity as evidenced by its technical default under its bank agreement; and doubts about the company's ability to support its high debt level given its negative free cash flow.