Summary
Republic Services, Inc. (RSG) has filed an 8-K report detailing significant changes to its credit facilities and the implications for its debt obligations. The company entered into a new $1.25 billion unsecured revolving credit facility that matures in May 2017, replacing an existing facility. This new facility offers flexibility with an option to increase availability by up to $500 million, subject to certain conditions. Additionally, an amendment to its existing $1.25 billion credit facility was made, reducing its commitment to $1.0 billion and aligning its terms with the new facility. Crucially, these actions have resulted in the automatic release of subsidiary guarantees on all of the company's outstanding senior notes, totaling $5.6 billion. Guarantees on certain debentures issued by a subsidiary have also been released. This release of guarantees significantly alters the credit profile of these debt instruments, potentially impacting their risk and return for investors.
Key Highlights
- 1Republic Services entered into a new $1.25 billion unsecured revolving credit facility maturing in May 2017.
- 2The new credit facility replaces a previous $1.25 billion facility and includes an option to increase borrowing capacity by up to $500 million.
- 3An amendment to an existing credit facility reduced its commitment to $1.0 billion and aligned its terms with the new facility.
- 4The primary impact for investors is the automatic release of subsidiary guarantees on all $5.6 billion of the company's outstanding senior notes.
- 5Guarantees on certain debentures issued by a subsidiary (Browning-Ferris Industries, LLC) were also released.
- 6The credit facilities contain customary covenants requiring the maintenance of specific financial ratios (e.g., EBITDA to interest, debt to EBITDA).