GFL Environmental withdraws $400 million notes offering, shifts proceeds to term loan

By Paul A. Harris

Portland, Ore., Oct. 25 – GFL Environmental Inc. withdrew a $400 million offering of senior unsecured notes (Caa2/CCC+) and shifted the proceeds to its concurrent bank loan, lifting the size of the incremental term loan to $1.71 billion from $1.31 billion, market sources said on Thursday.

The bond deal, which was originally announced as Thursday business, came with initial guidance in the low-to-mid 8% area, sources said.

No official price talk was announced.

Barclays was lead left bookrunner on the bonds.

The shift in proceeds to the loan from the bonds impacted the pricing of the loan and its credit ratings, sources said.

Dealers came with a bigger discount on the loan, lowering the price to 98.75 from earlier talk of 99 to 99.25.

S&P Global Ratings notched the Toronto-based environmental services company’s secured debt rating one grade lower, to B+ from BB-. The most substantial immediate impact of the shift in proceeds to the secured debt from the unsecured bonds, in GFL's capital structure, is a substantial decrease in recovery prospects, to 80% from 95%, S&P commented.

Moody's Investors Service is expected to lower its rating on GFL's secured debt to B2 from B1, sources say.

GFL Environmental came to the debt capital markets to help fund its merger with Waste Industries.

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