Waste Connections took advantage of a welcoming bank market and scored a larger revolver through refinancing, said Worthing Jackman, executive v.p. and cfo. The new facility could be used for acquisitions or stock repurchases; the company also has convertible notes outstanding that become redeemable in May.
The new $850 million facility replaces a $650 million facility the company had and extends its maturity to January 2011. Based on the leverage ratio at closing, borrowings under the facility are priced at LIBOR plus 1%. Grid points changed, explained Jackman, so now if leverage increases, pricing will remain at LIBOR plus 1% longer than it would have with the old facility. The company also reduced commitment fees.
Jackman said the company is always looking at potential acquisitions, primarily smaller private companies that have between $40-60 million in revenues a year. "We always said publicly we will continue to fund our growth strategy and provide additional flexibility in the capital structure," he explained.
Bank of America and Deutsche Bank have been the company's traditional lenders. "It's the continuity of the relationship," Jackman said. "They have always been good supporters of us. Whenever we do a refinancing, we have always offered the [opportunity] to existing banks first, that is why you don't really see much of a turnover in the bank group."