Waste Connections has completed its debut "B" loan, taking advantage of strong investor interest and a ripe market for loan issuers. The new credit comprises a $400 million revolver and a $175 million "B" term loan. The company's prior facility was a $435 million, five-year revolver completed in May 2000. Waste Connections wanted to prevent that revolver from becoming current on the company's balance sheet, so the company had a refinancing window between September of this year and May 2004 to refinance, explained Steven Bouck, Waste Connections' executive v.p. and cfo. Based on the current market conditions in both the term loan and revolver markets, the company felt that it was prudent to go after the loan sooner rather than later, he added.
Indeed, Waste Connections was even able to increase the size of the credit by $75 million during syndication after originally looking for a $350 million revolver and $150 million "B" piece. The decision to upsize was twofold, explained Bouck. First, the company had a great reception from the investor community and did not want to cut back its incumbent bank group too much. Second, the company could use the proceeds, Bouck said. Possible uses include confronting $150 million in convertibles that are puttable in April and using the loan for future acquisitions and general corporate purposes.
The revolver is priced on a grid tied to Waste Connections' debt-to-EBITDA and currently carries a LIBOR plus 2% spread. The term loan piece is also priced at LIBOR plus 2%. The former facility was priced at LIBOR plus 21/4%. Bouck attributed the better pricing to credit rating upgrades and the company's dramatic growth in terms of size and scale since completing the previous facility. "We have an entirely different credit profile," Bouck said. Waste Connections was also able to obtain additional covenant flexibility for acquisitions and operating strategies. Fleet Securities and Deutsche Bank are joint lead arrangers for the credit.