Waste Connections has refinanced its $600 million bank facility with a new $650 million revolver that removes a $200 million institutional tranche. Waste Connections shifted the outstanding amount of the term loan to the revolver, reducing the spread for the company and taking advantage of the current market conditions, said Worthing Jackman, cfo of the Folson, Calif.-based waste services company.
Utilization under the old facility was $31 million for the $400 million revolver and $200 million for the term loan. On a $400 million revolver, that utilization level was very low, Jackman noted. "By shifting all the utilization under the new revolver, the banks get a better return," he said. The old revolver and term loan were priced at LIBOR plus 1 1/2% and LIBOR plus 1 3/4%, respectively. Meanwhile, the new revolver is priced at LIBOR plus 1%. Commitment fees have also been reduced. Other advantages include an extension of the maturity to October 2009, pre-approval to increase the facility by $150 million and the ability to redeem convertible notes callable in May 2006.
Bank of America and Deutsche Bank lead the new revolver, while Wells Fargo Bank, Calyon and Union Bank of California are documentation agents. KeyBank and Commerzbank were added to the syndicate and only Washington Mutual dropped out of the revolver syndicate, said Jackman. He explained that the bank has exited the corporate banking market (see story, page 4). Fleet Bank and Deutsche Bank led the old deal.
Jackman believes continuity and reciprocity are important when choosing a bank group. "The process was more of an amendment where the banks were offered to expand their commitment to us," he said. "Many of the lenders have been with us for a few years, in some cases since the company was founded in 1997. From our standpoint it was more important to make sure we satisfied the increased commitments of our current bank group versus inviting too many new banks into the facility."