Moody’s rates GFL notes B1

Moody’s Investors Service said it assigned a B1 rating to GFL Environmental Inc.’s proposed $500 million senior secured notes and affirmed GFL’s ratings, including its B3 corporate family rating, its B3-PD probability of default rating, the B1 ratings on its senior secured term loan and the Caa2 ratings on its senior unsecured notes. The outlook remains stable.

GFL is in the process of acquiring County Waste of Virginia, LLC for about C$642 million. GFL will be raising a total of about C$1.38 billion in funding through $500 million of new senior secured notes, an add-on of $275 million to the 7% senior unsecured notes due June 1, 2026, a cash equity injection of C$300 million and rolled equity of about the equivalent of C$53 million. The C$1.38 billion in funding sources will be used to pay the acquisition price and repay the $300 million outstanding on GFL’s revolver, with the remainder of the proceeds left as cash on GFL’s balance sheet, Moody’s said.

“GFL continues to implement its acquisition growth strategy through the county acquisition, which will increase GFL’s pro forma EBITDA for FY2019 to close to C$1 billion and increase leverage slightly to 7.1x from 7x (pro forma for acquisitions made in 2019). Operational improvements and price optimizations may deleverage GFL’s balance sheet, however, we expect that continuing acquisitions will keep leverage around this level over the next 12 months,” said Louis Ko, a Moody’s vice president and senior analyst, in a press release.

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