FleetBoston Financial and Bank of America are in the market with a $475 million refinancing package, split between $300 million of bank debt and $175 million of senior subordinated notes, for Casella Waste Systems. The recent softening of Allied Waste in the secondary loan market should not impact syndication of the new facility, as Casella is a regional waste services company with separate issues, one buysider noted. In addition, the bank refinancing is being done with existing lenders, who are supportive of the credit, the buysider said. Calls to Richard Norris, cfo of Casella, and officials at the banks were not returned.
The new facility is split between a five-year, $175 million revolver, which includes a $65 million letter of credit facility, and a seven-year, $125 million "B" term loan. The old credit consisted of a $300 million revolver and a $150 million "B" piece, priced at LIBOR plus 2 3/4 % and LIBOR plus 4%, respectively. New pricing could not be ascertained.
A Standard & Poor's report highlights that Fleet will not perfect liens on real estate, landfills and motor vehicle titles, which the rating agency believes are core operating assets to the waste services industry. The absence of that lien perfection could limit the lenders' access to these important assets in a bankruptcy scenario. However, the sub debt cushion should provide lenders with a meaningful recovery in the event of bankruptcy. The new bank debt is rated B1/BB-, and the sub debt is rated B3/B.