Allied Waste Industries is putting in place a $3.45 billion credit facility, consisting of a five-year $1.55 billion revolver, a seven-year $1.45 billion term loan and a $450 million institutional letter of credit facility. Allied Waste has already received commitments in excess of the $1.55 billion on the revolver, according to a company statement. The term loans are being pitched at LIBOR plus 2 1/4-1/2%. J.P. Morgan and Citigroup are leading the loans which, along with a comprehensive refinancing, will reduce total debt by $500 million.
Allied is also issuing common stock, mandatory convertible preferred stock and 10-year senior notes. The proceeds will repay $195 million of 10% senior subordinated notes due 2009, $125 million of 9 1/4% senior notes due 2012, $600 million of 7 5/8% senior notes due January 2006, $70 million of 7 7/8% senior notes due March 2005 and pay off the current credit facility.
The offerings will reduce refinancing risk associated with near-term maturities--particularly in 2006--and cut interest costs, according to Fitch Ratings. The position of senior debt holders will also benefit from the addition of new common and preferred stock. Allied's revolver is currently priced at LIBOR plus 3%.