Laidlaw is in talks with several U.S. and Canadian banks about arranging a $250 million revolving credit facility and a $500 million high-yield bond issue for when it emerges from Chapter 11 bankruptcy. Geoff Mann, v.p. and treasurer at the Burlington, Ontario-based transportation company, said Laidlaw has obtained a $200 million, two-year secured revolving debtor-in-possession (DIP) facility that will provide liquidity while the company is in court proceedings. The plan has not yet been voted on to put in place the exit facility, but it is expected to be a syndicated $250 million revolver, he added, declining to name the potential banks to lead the facility or bond offering. Laidlaw intends to exit from bankruptcy proceedings within six months to a year, he noted.
General Electric Capital Corporation and General Electric Capital Canada are providing the DIP facility, which has a $100 million sub-facility for letter of credit purposes. Mann explained that the company has letter of credit needs for insurance purposes and when performance bonds are required. Instead of posting cash collateral, Laidlaw prefers to issue letters of credit, he said. Since GECC is not a bank, the letters of credit will be issued through a bank GECC chooses. Mann was unsure whether GECC syndicated the DIP, but said that the financing titan has the option to syndicate. "From the company's point of view, if we exit, then it is in our interest to develop banking relationships," Mann said. "It probably makes no difference to GECC. They're the most capitalized company in the country. The theory is that after exiting, you are much stronger coming out than when you come in," said Mann, commenting on the prospects for future financing needs. He declined to elaborate on why GECC was chosen to lead the deal.
Prior to the bankruptcy proceedings, CIBC World Markets led a $1.4 billion multi-currency, unsecured loan and Laidlaw had over $2 billion in bond debt, said Mann. Borrowings were about $1.2 billion on the loan. Laidlaw had to file for Chapter 11 after a $700 million investment in Safety-Kleen was written off.