S&P rates GFL notes B

Standard & Poor’s said it affirmed its ratings on GFL Environmental Inc., including its B long-term corporate credit rating on the company. The outlook is stable.

At the same time, S&P assigned its B issue-level rating and 4 recovery rating to the company’s proposed $250 million senior unsecured notes due 2021. The 4 recovery rating on the notes reflects the agency’s expectation of average (30%-50%; in the lower half of the range) recovery in a default scenario.

The fair business risk profile on GFL primarily incorporates S&P’s view of the company’s participation in the environmental services industry, operations in the highly fragmented and competitive solid waste business and average profitability assessment.

GFL plans to finance the Matrec acquisition, and other tuck-in acquisitions, through a combination of high-yield debt and C$468 million in equity. The equity contribution is from Macquarie Infrastructure Partners III and existing investors.

Post-acquisition, GFL will operate in almost all provinces in Canada, with about 50% of revenues generated from Ontario. However, despite this, GFL’s diversity characteristics and market positions are weaker than those of the much larger national leaders, the agency said.

© 2015 Prospect News.
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