Waste Services has received a waiver from its senior lenders for non-compliance with certain financial covenants. The waiver extends through Oct. 5 and will give the company access to $10 million in excess of the amounts currently outstanding under its $60 million revolver. Prior to the waiver the company did not have access to the revolver (LMW, 8/23). Waste Services intends to negotiate permanent revisions to the credit facility before then, according to a release from the company. Mark Pytosh, executive v.p. of the waste management company, did not return calls.
Lehman Brothers, CIBC World Markets and Bank of America lead the bank debt, consisting of the five-year $60 million revolver and seven-year, $100 million term loan facility. The bank debt has been downgraded by Moody's Investors Service to Caa1 from B1. The downgrade was prompted by the rapid decline over the last quarter in expected operating performance and cash generation; the company's impaired liquidity as evidenced by its technical default under its bank agreement; and doubts about the company's ability to support its high debt level given its negative free cash flow. Waste Services' 9 1/2% notes dropped from par to 86 two weeks. The debt has inched back up to 87 1/2.