Summary
Republic Services, Inc. (RSG) announced on May 1, 2007, the amendment and restatement of its existing $750 million credit agreement, effectively increasing its unsecured credit facility to $1.0 billion. This expanded facility provides greater financial flexibility for the company. The primary intended use for this increased credit line is to support letters of credit required for ordinary course business operations. The agreement includes standard financial covenants that the company must adhere to, which also permit dividend payments and stock repurchases as long as compliance is maintained. At the time of the amendment, RSG was in compliance with these covenants.
Key Highlights
- 1Republic Services, Inc. (RSG) has increased its unsecured revolving credit facility from $750 million to $1.0 billion.
- 2The amendment and restatement of the Credit Agreement was effective as of April 26, 2007.
- 3The primary intended use of the increased facility is for letters of credit required in the ordinary course of business.
- 4The company has the option to borrow at either LIBOR-based or prime-based rates.
- 5The agreement contains customary affirmative and negative covenants, including financial ratio requirements.
- 6RSG was in compliance with all financial covenants under the Amended Facility as of April 26, 2007.
- 7At the time of amendment, $50.0 million was borrowed and $443.0 million was committed to letters of credit, leaving $507.0 million in availability.
Frequently Asked Questions
The main impact for investors is that Republic Services has secured a larger credit facility, increasing its financial flexibility by $250 million. This enhanced capacity can support business operations and potentially signal financial strength.
The company intends to primarily use the increased credit facility to back letters of credit that are necessary for its day-to-day business operations.
The credit agreement includes covenants that allow the company to pay dividends and repurchase its common stock, provided it remains in compliance with the financial covenants stipulated in the agreement.
As of April 26, 2007, $50.0 million was drawn for borrowings and $443.0 million was committed for letters of credit, leaving $507.0 million of the $1.0 billion facility available.