Casella seeks revolver amendment to revise size, maturity and pricing

By Sara Rosenberg

New York, Jan. 24 - Casella Water Systems Inc. is in talks with lenders about amending its revolving credit facility to increase the size to $210 million from $177.5 million, extend the maturity date and decrease pricing, company officials said in a conference call on Monday.

The revolver currently matures in December 2012 and is priced at Libor plus 400 basis points.

The amended revolver will include an accordion feature sufficient to redeem the company's second-lien notes when they are callable.

Term B being repaid

In addition, the company announced that it will pay down its senior secured term loan B in full using proceeds from the sale of select non-integrated recycling assets to a new company formed by Pegasus Capital Advisors LP and MissionPoint Capital Partners LLC, HarbourVest Partners LLC and Ares Capital Corp. for $130.4 million.

The $128.4 million term loan B due April 2014 is priced at Libor plus 500 bps with a 2% Libor floor. It is the most expensive debt that the company can pay down immediately, officials said in the call.

Closing of the sale is expected to occur in the fourth quarter of fiscal year 2011, subject to customary conditions.

Focus on deleveraging

Following completion of the paydown, Casella estimates that its pro forma leverage will be 4.0 times, down from 4.4 times in the second quarter of fiscal year 2011.

And, the company is committed to reducing leverage to at or below 3.5 times going forward by continuing to focus on improving asset performance and increasing cash flows, and continuing to pursue divestitures of non-core assets.

Also, the company will focus on opportunistically refinancing debt to further reduce interest costs.

Officials continued to say in the call that the company is selling $200 million of senior subordinated notes due 2019 to fund a tender offer for its $195 million of 9.75% senior subordinated notes due 2013.

Full year guidance updated

In connection with the sale announcement, Casella provided updated fiscal year 2011 guidance to reflect the pro forma impact of the divestiture.

Revenues for the year are now expected between $462 million and $472 million, adjusted EBITDA is expected between $109 million and $113 million, and capital expenditures are expected between $52 million and $58 million.

Casella is a Rutland, Vt.-based provider of solid waste, recycling and resource management services.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.