Waste Management closed a $2.5 billion facility in late June, a deal which breaks down into a $1.75 billion five-year revolver and a $750 million 364-day term loan. The credit replaces a $2.9 billion deal that was due to expire. Ron Jones, v.p. and treasurer, said the company opted to go with a smaller deal since it has unused credit lines. Houston-based Waste Management is one of the leading trash haulers in the country.
Because the new deal is smaller than the previous facility, pricing was lowered 1/8% on a fully drawn basis. "In the old agreement, the requirement was that we repay some of the bank debt with asset sales," Jones explained. "The new deal has done away with this requirement." He says the company got a strong reaction in the market. "It was well oversubscribed, with
$2.75 billion in commitments," Jones said. "It was partly due to this sector being a cash-flow generator. The company has also done a turnaround with very demonstrable results, such as repaying our debt."
J.P. Morgan and Bank of America are the co-leads and led the prior deal. The company did not go out to bid. "We have longstanding relationships with them," said Jones. "They've supported us on the cash management side." The bank group did expand this time, adding Barclays Capital. Pricing on the five-year facility is 112 basis points over LIBOR and 112.5 basis points over LIBOR on the 364-day line of credit. The company's EBITDA is $3.2 billion. Standard & Poor's gave the credit a BBB rating, while Moody's Investors Service gave it a Ba1 rating.