Waste Industries USA has refinanced its revolver, reducing it from $200 million to $175 million, but with the option to re-expand. "We never utilized much of [the previous facility], so we were very comfortable in reducing the size of the initial request because we have the ability to go up to $200 million at any time prior to maturity," said Steve Grissom, Waste Industries' cfo. He said the Raleigh, N.C.-based garbage company had tapped less than half of the credit in the past.
Leverage covenants were relaxed for the new deal, giving the company more flexibility over the first 18 months to make acquisitions. "We have already executed a number of acquisitions this year and we have an active pipeline. [The revolver] will fund future expenditures," noted Grissom. After March 2005, the covenants will revert to a total funded leverage ratio of four times. Pricing remains the same as on the initial revolver for the first six months, at LIBOR plus 21/4%. After that, pricing will be tied to a leverage-based grid, which would currently translate to a spread of 2% over LIBOR, Grissom explained.
Fleet Securities continues to lead the facility, with former lender Citizens Trust backing out of the group. That exit made room for Bank of America, said Grissom. "They wanted to develop some local relationships here in North Carolina in the Raleigh area," he added, noting that B of A approached the company. Branch Banking and Trust and Wachovia Securities are agents on the deal. Grissom pointed out that Fleet's expertise in dealing with waste and environmental companies helps it form relationships with other banks. "It brings a bit of confidence to the rest of the banking members that Fleet has this experience in the waste industry...the other banks rely heavily on that," Grissom said. Other participant banks include Comerica, RBC Centura and LaSalle Bank.