Summary
Republic Services, Inc. (RSG) filed an 8-K on July 5, 2005, reporting the establishment of a new $750.0 million unsecured credit facility, which became effective on June 28, 2005. This new facility matures in June 2010 and replaces two existing credit agreements totaling $750.0 million ($300.0 million short-term and $450.0 million long-term) that were terminated on the same date. The company intends to use the new credit facility primarily for letters of credit required in its ordinary course of business, with options for LIBOR-based or prime rate-based interest on borrowings.
Key Highlights
- 1Republic Services entered into a new $750.0 million unsecured credit facility on June 28, 2005.
- 2The new credit facility has a maturity date of June 2010.
- 3This new facility replaces two prior credit agreements totaling $750.0 million.
- 4The company primarily uses its credit facilities for issuing letters of credit.
- 5The new agreement includes customary affirmative and negative covenants, permitting dividends and stock repurchases if covenants are met.
- 6As of June 28, 2005, $387.2 million of letters of credit were outstanding under the new facility.
Frequently Asked Questions
The primary purpose of the new credit facility is to provide Republic Services with a source of funding for letters of credit required in the ordinary course of its business. It also offers the flexibility for revolving loans.
The new $750 million credit facility replaces two previous agreements totaling $750 million ($300 million short-term and $450 million long-term). The new facility is unsecured and has a longer maturity of five years (June 2010) compared to the previous arrangements, which included a short-term facility renewed annually.
The credit agreement includes customary covenants that require Republic Services to maintain certain financial ratios. Importantly, these covenants allow the company to continue paying dividends and repurchasing its common stock, provided it remains in compliance with the terms of the agreement.
As of the effective date of the agreement (June 28, 2005), Republic Services had $387.2 million of letters of credit outstanding, leaving $362.8 million available for further borrowing or additional letters of credit under the new $750 million facility.