Casella finishes debt refinance
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Published: July 10, 2009
Casella Waste Systems on Thursday completed the refinancing of its existing senior secured debt with a $177.5 million revolving credit facility and a $130 million term loan.
In connection with the revolving line of credit, Casella simultaneously completed the previously announced $180 million bond offering at 11 percent interest due 2014.
"Because of our stable cash flow generation and our valuable solid waste and resource optimization assets we were able to complete a successful refinancing of our senior secured debt maturities despite the continued weakness in the financial system," said John Casella, chairman and CEO of Casella Waste Systems. "We received strong market demand for both the notes (bond) offering and the loan. Casella continued that "since the notes (bond) offering was oversubscribed, we were able to obtain a favorable interest rate … ."
The company said because of strong demand for its term loan, the company was able to downsize the bond offering by $25 million and increase the term loan by $30 million.
Casella said the refinancing represents "a favorable outcome because the effective yield of the term loan … is approximately 3.60 percent lower than the notes" and the loan is also pre-payable.
"Our next debt maturity is in December 2012, before which our team will execute against our mid-term strategy to reduce debt leverage by increasing cash flows and selling non-core assets," Casella said. "In addition, under the senior secured credit facility, the financial covenants were reset to provide us with more flexibility compared to the refinanced facilities. With the completion of the refinancing, the company is in full compliance with the covenants as amended under the new facility."
The proceeds from the credit facility and from the bond offering were used to refinance the borrowings under the company's $525 million senior secured credit facility due April 2010. After the transaction, the company expects to have $87.3 million of unused borrowing on its revolving line of credit, after taking into account $51.7 million of letters of credit.
— Staff reports
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