Update on Recent Financing Initiatives VAUGHAN, ON, Sept. 28, 2021 /PRNewswire/ - GFL Environmental Inc. (NYSE: GFL) (TSX: GFL) ("GFL" or the "Company"), a leading North American diversified environmental services company, today provided an update on recent financing initiatives.
GFL announced today that it has amended its revolving credit facility to, among other things, (a) modify the applicable pricing grid, resulting in a reduction of GFL's applicable margin by 50 basis points, on a pro forma basis, (b) extend the term by two years to September 2026, (c) increase the facility by an additional C$200.0 million, and (d) add a delayed draw term loan of up to C$500.0 million to finance acquisitions over the next 12 months.
GFL also announced that it has entered into a definitive agreement (the "Subscription Agreement") with affiliates of HPS Investment Partners, LLC ("HPS") pursuant to which HPS has agreed to subscribe for up to 8,196,721 Series B Perpetual Convertible Preferred Shares (the "Preferred Shares") at US$36.60 per share (the "Private Placement"). GFL has the right to issue up to an aggregate amount of US$300.0 million of Preferred Shares under the Subscription Agreement until the end of the year.
The Preferred Shares are initially convertible into 6,830,601 Subordinate Voting Shares, based on the initial liquidation preference and a conversion price of US$43.92 per share, representing an approximate 20% premium to the 10 day volume weighted average price of the Subordinate Voting Shares.
The proceeds from the Private Placement will be used, together with amounts drawn on the delayed draw term loan, to fund the Company's robust near-term acquisition pipeline. These financing initiatives will allow the Company to maintain its current credit rating profile and leverage within previously stated ranges.
"We continue to successfully execute on our commitment to reduce our cost of capital, pursue opportunistic financings to fund our growth and preserve our leverage, all with a view to increasing our free cash flow", said Patrick Dovigi, Founder and Chief Executive Officer of GFL. "Our recent add-on unsecured bond offering of US$250 million, which was significantly oversubscribed and priced at 4.000%, as well as the successful amendment to our credit facility which priced at Libor plus 175 bps, a 50 bps improvement over our current facility, demonstrate the continued support we have from our institutional debt investors. We have worked very hard to build their trust as stewards of their capital and in turn they have supported us in our growth strategies, allowing us to further pursue our goal of creating long-term value for all of our stakeholders." Mr. Dovigi continued, "As we look to the fourth quarter, our acquisition pipeline is very robust with high quality companies that are looking to transact before year end. With that in mind, we felt it was prudent to take these financing steps in advance to ensure that we can seamlessly execute on our acquisition opportunities, while maintaining our previously stated leverage targets." Mr. Dovigi concluded, "Lastly, I also want to thank HPS, an investor and partner of GFL since 2014, for their additional equity commitment, further demonstrating their confidence in our ability to deliver on our strategic goals."
Scot French, Governing Partner of HPS, said, "We have enjoyed a long and successful partnership with Patrick and the GFL team over the past eight years and we are pleased to have the opportunity to provide GFL with incremental capital to facilitate their continued growth. We have complete confidence in GFL's management team and business strategy and we believe that the Company is well positioned to further stand out as a leader in the North American environmental services industry."
On September 24, 2021, GFL also closed its previously announced offering of US$250.0 million in aggregate principal amount of 4.000% senior notes due 2028 (the "Notes"), in a transaction that was significantly oversubscribed. GFL previously issued US$500 million in aggregate principal amount of its 4.000% senior notes due 2028 (the "Existing Notes"). The Notes will be treated as "Additional Notes" under the indenture governing the Notes and as a single series with the Existing Notes under such indenture.
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