GFL Environmental Inc. Successfully Reprices and Extends its Senior Secured Term Loan

Rhea-AI Summary

GFL Environmental has successfully amended its $725 million senior secured term loan. The amendment reduces the borrowing rate from SOFR +250 basis points to SOFR +200 basis points and extends the loan's maturity from 2027 to 2031. This move comes after a recent credit rating upgrade and was significantly oversubscribed. CEO Patrick Dovigi highlighted that this repricing will help increase free cash flow, extend debt maturities, and maintain balance sheet flexibility. Over the last 12 months, GFL has reduced its senior secured term loan spread by 110 basis points and aims to achieve a net leverage target between 3.65x and 3.85x by year-end. The company is also focusing on achieving an investment-grade credit rating in the medium term.

Positive

• Reduced borrowing rate from SOFR +250 basis points to SOFR +200 basis points.
• Extended loan maturity from 2027 to 2031.
• Significantly oversubscribed transaction.
• Reduction in senior secured term loan spread by 110 basis points over the past year.
• Commitment to achieve net leverage target of 3.65x to 3.85x by year-end.
• Focus on achieving an investment-grade credit rating in the medium term.

Negative

• None.

Financial Analyst

GFL Environmental Inc.'s successful repricing and extending of its $725.0 million senior secured term loan signifies a positive financial maneuver. The reduction in the borrowing rate from SOFR +250 basis points to SOFR +200 basis points translates to a lower interest expense, which directly impacts the company's free cash flow. This move provides immediate cash flow benefits, enhancing liquidity and financial flexibility.

Extending the term loan's maturity from 2027 to 2031 demonstrates prudent long-term financial planning. By pushing out the due date, GFL reduces the near-term refinancing risk, promoting greater balance sheet stability. The extension aligns with the company's strategy to deleverage and achieve a net leverage target between 3.65x and 3.85x by the year's end.

It's noteworthy that the transaction was significantly oversubscribed, reflecting investor confidence in GFL's credit quality and business prospects. This over-subscription is a good signal of robust demand for GFL's debt, likely influenced by the recent credit rating upgrade. Overall, the repricing and extension are strategic steps towards achieving an investment-grade credit rating, which would further lower borrowing costs and improve investor perception and market positioning.

Market Research Analyst

The environmental services industry, in which GFL operates, often requires substantial capital for growth and operations. By successfully refinancing its term loan at more favorable terms, GFL effectively enhances its competitive position in the market. The company can now redirect savings from reduced interest expenses into strategic initiatives, such as acquisition opportunities, technology advancements, or further debt reduction.

This strategic financing decision aligns with broader industry trends of optimizing capital structure to increase shareholder value. Environmental services companies with lower debt costs are better positioned to invest in environmentally friendly technologies and compliance with regulatory standards, a critical factor in maintaining market leadership.

Furthermore, the extended maturity of the loan provides stability against economic cycles and potential interest rate hikes, which can be particularly volatile in the current global financial environment. Investors should view this move as a proactive measure that enhances GFL's ability to sustain long-term growth in a highly capital-intensive industry.

VAUGHAN, ON, July 3, 2024 /PRNewswire/ - GFL Environmental Inc. (NYSE: GFL) (TSX: GFL) ("GFL" or the "Company"), a leading North American diversified environmental services company, today announced that it has amended its US$725.0 million senior secured term loan to reduce its borrowing rate to SOFR +200 basis points from the previous SOFR +250 basis points, in a transaction that was significantly oversubscribed. The Company also extended the maturity of the senior secured term loan from 2027 to 2031.  

"On the back of our recent credit rating upgrade, we opportunistically pursued the repricing of our senior secured term loan with a view to further increasing our free cash flow, extending our debt maturities and preserving balance sheet flexibility", said Patrick Dovigi, Founder and Chief Executive Officer of GFL. "Our ability to reprice our senior secured term loan on one of the tightest pricing terms since 2008 for a company with our credit quality is a continued testament to our high-quality, long-standing debt investors, many of whom have been with us for over a decade." Mr. Dovigi concluded, "Over the course of the last 12 months, we have been able to reduce our senior secured term loan spread by 110 basis points given our focus on delevering. We remain committed to achieving our net leverage target of between 3.65x and 3.85x by the end of the year and we believe this transaction will move us closer to our broader goal of achieving an investment grade credit rating in the medium term."

About GFL

GFL, headquartered in Vaughan, Ontario, is the fourth largest diversified environmental services company in North America, providing a comprehensive line of solid waste management, liquid waste management and soil remediation services through its platform of facilities throughout Canada and in more than half of the U.S. states. Across its organization, GFL has a workforce of more than 20,000 employees.

Forward-Looking Statements

This press release includes certain "forward-looking statements" within the meaning of applicable securities laws, including statements relating to achieving an investment grade credit rating and our expected net leverage target for the end of 2024. In some cases, but not necessarily in all cases, forward-looking statements can be identified by the use of forward looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "is positioned", "estimates", "intends", "assumes", "anticipates" or "does not anticipate" or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", "will" or "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking statements. Forward-looking statements are not historical facts, nor guarantees or assurances of future performance but instead represent management's current beliefs, expectations, estimates and projections regarding future events and operating performance. Forward-looking statements are necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by GFL as of the date of this release, are subject to inherent uncertainties, risks and changes in circumstances that may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ, possibly materially, from those indicated by the forward-looking statements include, but are not limited to, the factors described in the "Risk Factors" section of GFL's annual information form for the 2023 fiscal year filed on Form 40-F and GFL's other periodic filings with the U.S. Securities and Exchange Commission and the securities commissions or similar regulatory authorities in Canada. These factors are not intended to represent a complete list of the factors that could affect GFL. However, such risk factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. You should not place undue reliance on forward-looking statements, which speak only as of the date of this release. GFL undertakes no obligation to publicly update any forward-looking statement, except as required by applicable securities laws.

For more information: Patrick Dovigi, +1 905-326-0101, pdovigi@gflenv.com

View original content to download multimedia:https://www.prnewswire.com/news-releases/gfl-environmental-inc-successfully-reprices-and-extends-its-senior-secured-term-loan-302188822.html

SOURCE GFL Environmental Inc.

FAQ

What recent financial transaction did GFL Environmental complete?

GFL Environmental successfully amended its $725 million senior secured term loan, reducing the borrowing rate and extending the maturity.

How much did GFL Environmental reduce its borrowing rate by?

GFL Environmental reduced its borrowing rate from SOFR +250 basis points to SOFR +200 basis points.

What is the new maturity date for GFL Environmental's senior secured term loan?

The new maturity date for GFL Environmental's senior secured term loan is 2031, extended from 2027.

What are GFL Environmental's leverage targets for the end of the year?

GFL Environmental aims to achieve a net leverage target between 3.65x and 3.85x by the end of the year.

What long-term financial goal is GFL Environmental aiming for?

GFL Environmental is focusing on achieving an investment-grade credit rating in the medium term.