01—Abstract
Summary
Summary of the 8-K filed February 29, 2024. Cited figures are marked; the original filing is the authoritative source.
Waste Connections, Inc., a corporation organized under the laws of Ontario, Canada, reported in this Form 8-K dated February 29, 2024 that on February 27, 2024 (the Effective Date) it entered into a new Revolving Credit Agreement with Bank of America, N.A.
(acting through its Canada Branch as global agent, and as U.S. agent) and other lenders. The facility has a five-year term, provides for revolving advances up to $3.0 billiona at any one time outstanding, and includes flexibility for an uncommitted upsize of up to $1.0 billion (to up to $4.0 billion). Advances may be made in U.S. dollars and Canadian dollars, and borrowings are unsecured with no subsidiary guarantors.
The company used a portion of the proceeds from the new revolver to prepay all amounts outstanding under its 2021 Second Amended and Restated Revolving Credit and Term Loan Agreement (dated July 30, 2021) and its 2022 Term Loan Agreement (dated October 31, 2022), and to terminate both agreements and their associated loan documents. The company states it intends to use the remaining proceeds for repaying other indebtedness, financing acquisitions, dividends or other equity distributions as permitted, capital expenditures, working capital, transaction fees and other lawful corporate purposes.
Key financial terms for investors include interest at term SOFR or base rate for U.S. dollar borrowings and term CORRA or Canadian prime rate for Canadian dollar borrowings, plus an applicable margin of 0.750%b to 1.250% for term loans and letter of credit fees, and a commitment fee of 0.065% to 0.150% on unused commitments, both tied to the company's debt rating. The agreement includes a financial covenant capping the ratio of Consolidated Total Funded Debt to Consolidated EBITDA at 3.75 to 1.00 (or 4.25 to 1.00 during material acquisition periods, subject to limitations), tested quarterly.
02—Key points
Key Highlights
- New $3.0 billion unsecured revolving credit facility entered February 27, 2024, expandable by an uncommitted $1.0 billion to $4.0 billion
- Five-year term from the Effective Date, with two additional one-year extension options available
- Proceeds used to prepay and terminate the 2021 Second Amended and Restated Revolving Credit and Term Loan Agreement and the October 31, 2022 Term Loan Agreement
- Sub-limits of up to $320 million for letters of credit and $100 million for swing line loans within the aggregate commitments
- Pricing tied to debt rating: applicable margin of 0.750% to 1.250% for SOFR/CORRA loans and letter of credit fees; commitment fee of 0.065% to 0.150% on unused amounts
- Financial covenant limits Consolidated Total Funded Debt to Consolidated EBITDA to 3.75x (4.25x during material acquisition periods, subject to limitations)
- Facility is unsecured with no subsidiary guarantors and includes a change of control event of default
03—Questions
Frequently Asked Questions
What is the size and term of the new revolving credit facility?
The Revolving Credit Agreement provides for revolving advances of up to $3.0 billion at any one time outstanding, with a five-year term from the February 27, 2024 Effective Date, subject to two additional one-year extension requests. The company also has flexibility for an uncommitted upsize of up to $1.0 billion, to a maximum of $4.0 billion.
What happened to the company's existing credit agreements?
The company used a portion of the new revolver's proceeds to prepay all amounts outstanding under its 2021 Second Amended and Restated Revolving Credit and Term Loan Agreement and its 2022 Term Loan Agreement, and terminated both agreements along with their associated loan documents.
How is the borrowing cost determined under the new facility?
U.S. dollar borrowings bear interest at term SOFR or a base rate, and Canadian dollar borrowings bear interest at term CORRA or the Canadian prime rate, each plus an applicable margin. Term SOFR loans carry a 0.10% credit spread adjustment, and term CORRA loans carry 0.29547% for one-month and 0.32138% for three-month interest periods. The margin for term loans and letter of credit fees ranges from 0.750% to 1.250%, and the commitment fee on unused amounts ranges from 0.065% to 0.150%, with both based on the company's debt rating.
What financial covenant applies to the company under the facility?
As of the last day of each fiscal quarter, the ratio of Consolidated Total Funded Debt to Consolidated EBITDA, measured over the preceding 12 months, may not exceed 3.75 to 1.00, or 4.25 to 1.00 during material acquisition periods subject to certain limitations.
What are the intended uses of the borrowings?
The company intends to use substantially all borrowing proceeds to repay certain outstanding indebtedness under other credit facilities, finance acquisitions, dividends or other equity distributions as permitted, cover capital expenditures, working capital and certain transaction fees, costs and expenses, and for other lawful corporate purposes.
04—Continue