Summary
Republic Services, Inc. (RSG) filed an 8-K on November 25, 2008, detailing a Letter Agreement with Allied Waste Industries, Inc. This agreement is in furtherance of their previously announced merger and aims to satisfy the 'ratings condition' stipulated in the Merger Agreement. The core of the Letter Agreement involves both Republic and Allied, along with their significant subsidiaries, agreeing to provide guarantees for certain indebtedness. These guarantees are designed to bolster the financial standing and credit ratings necessary for the merger to proceed. The guarantees are structured to become effective around the merger's closing date, with specific provisions for Republic and Allied subsidiaries, and will terminate upon the successful completion or termination of the Merger Agreement. This action underscores the commitment of both companies to finalize the merger, especially in the context of potentially sensitive credit rating requirements. Investors should note that this is a step towards fulfilling merger conditions, rather than a new strategic initiative or a change in operational performance.
Key Highlights
- 1Republic Services and Allied Waste Industries entered into a Letter Agreement on November 25, 2008.
- 2The Letter Agreement is designed to help satisfy the 'ratings condition' of the previously announced Merger Agreement.
- 3Both companies and their substantial subsidiaries agreed to provide guarantees of certain indebtedness.
- 4These guarantees are intended to support the credit ratings required for the merger.
- 5Republic subsidiary guarantees become effective on the merger's effective date.
- 6Allied subsidiary guarantees become effective the day after the merger's effective date.
- 7The obligations under the Letter Agreement will terminate if the Merger Agreement terminates.