Allied Waste $300 million mandatory launch, road show seen for next week

By Ronda Fears

Nashville, March 27 - Allied Waste Industries Inc. is expected to launch $300 million of mandatory convertibles - part of a $4 billion refinancing package - next week and begin a full road show before pricing the issue, according to a source at one of the lead managers.

Convertible participants were expecting a big deal this week, but it was not immediately clear if it was the Allied Waste deal. There had been talk about a waste management name tapping the convertible market for several weeks also.

Late Thursday, Allied Waste announced the plan, which consists of $3 billion of bank facilities, $300 million of mandatory convertibles, $300 million of high-yield notes, $100 million of common stock, a $150 million of accounts receivables securitization and $300 million of divestitures.

The convertible deal, at least, is not expected to emerge with details until next week.

"There will be a full road show, it will be marketed," said the source at one of the lead managers, when asked if it would be a drive-by deal as has been the norm this week.

"Look for more [details] next week."

No timing was available on the high-yield portion of the package. Price talk on the bank facilities had been in circulation for some time however.

The new $3 billion credit facility consists of a $1.5 billion five-year revolver and $1.5 billion seven-year term loan B.

Price talk on the revolver was Libor plus 300 basis points and Libor plus 350 bps for the term loan.

JPMorgan, Citibank, Credit Suisse First Boston, Deutsche Bank and UBS Warburg are the lead banks on the credit facilities.

All those firms are involved to some extent in all the various financing instruments, but not all on every deal, convertible market sources said.

Allied Waste was holding a conference call late Thursday on the refinancing plan, which it said in a press release would allow it to retire $1 billion of debt this year and put the year-end debt balance below $7.9 billion.

Also, debt maturities will be extended, liquidity will be enhanced and the capital structure will be improved, said Tom Ryan, chief financial officer of Allied Waste, in the statement.

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