S&P raises Casella Waste notes to B-

Standard & Poor's said it raised its issue-level rating on Casella Waste Systems Inc.'s senior subordinated notes to B- from CCC+ in anticipation of the company's proposed refinancing of its revolving facility into a new asset-based loan (ABL) revolver and its proposed $60 million add-on offering to the notes.

The recovery rating on the notes was revised to 4 from 5, indicating an expectation of average (30% to 50%) recovery in the event of a payment default.

The B- corporate credit rating is unchanged and the outlook is stable.

If completed, S&P expects the company to use proceeds from the notes primarily to repay the outstanding amount under Casella's revolving credit facility, add a modest amount of cash to the balance sheet and for general corporate purposes.

The agency believes the company's free cash flow will improve in 2015 because of the expiration of an unfavorable put-or-pay contract, growth in its hauling and landfill businesses, and lower capital expenditures. S&P expect Casella's adjusted debt leverage to be reduced to below 6 times by the end of 2015. Pro forma for the proposed issue, it estimates that Casella had adjusted leverage of 6.6 times as of Oct. 31.

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