Laidlaw Inc. secured a $100 million bridge facility this month while the company restructures its $1.7 billion credit facility, on which it defaulted late last year. The facility can be broken down into $50 million in letters of credit. "Because of the nature of the business, in many cases you require letters of credit for a performance bond," said Geoff Mann, v.p. finance. The company issues performance bonds on a regular basis. The $1.7 billion facility is frozen and the company expects to have restructuring completed in March, when the bridge facility expires. The $100 million covers operating expenses over the next two months, Mann said. Laidlaw, based in Burlington, Ontario, is a transportation provider in the public school system, and owns Greyhound Lines. The bridge facility has several covenants that relate to cash flow and earnings before interest, taxation, depreciation, and amortization (EBITDA). "Given that we're in default, there are many covenants. We're talking pages of them," Mann said. There are no tranches: pricing is at LIBOR plus 41/2%.
Mann said the company stopped paying interest on its facility and public debt last May, due to problems with health care investments and the Chapter 11 bankruptcy filing of Safety Kleen, in which Laidlaw has a 44% stake. "The issues are not related to the core business," Mann said. The existing creditors, led by CIBC World Markets, lead the bridge loan facility. "We have dealt with the liquidity issues; we have cash on the balance sheet. Right now we're focused on restructuring," Mann said, adding that there is a way to get an extension on the bridge loan if restructuring is not completed by March 31. He declined to give the company's EBITDA. "I can't say. We're over-lawyered right now," Mann said.