Stericycle refinances via $950 million term loan, $1.2 billion revolver

By Marisa Wong

Morgantown, W.Va., Nov. 20 – Stericycle, Inc. entered into a credit agreement on Nov. 17 for a $950 million term loan and an up to $1.2 billion revolving credit facility, both of which mature on Nov. 17, 2022, according to an 8-K filed Monday with the Securities and Exchange Commission.

Merrill Lynch, Pierce, Fenner & Smith Inc., HSBC Securities (USA) Inc. and JPMorgan Chase Bank, NA are the joint lead arrangers and bookrunners with Bank of America, NA as administrative agent, JPMorgan and HSBC Securities as syndication agents and MUFG, Sumitomo Mitsui Banking Corp. and Wells Fargo Bank, NA as co-documentation agents.

Proceeds of the term loan and loans under the revolver were used at closing to refinance the loans and other credit extensions under the company’s existing term loan and revolver. The company’s existing second amended and restated credit agreement dated June 3, 2014 and its existing term loan agreement dated Aug. 21, 2015 were deemed to be amended, restated and consolidated by the new credit agreement.

Pricing under the new credit agreement is Libor plus an applicable margin based on the company’s consolidated leverage ratio. The applicable margin ranges from 90 basis points to 117.5 bps for the revolver and from 100 bps to 137.5 bps for the term loan. The applicable margins are initially 117.5 bps and 137.5 bps, respectively. The facility fee ranges from 10 bps to 20 bps and is initially 20 bps.

The credit agreement requires quarterly principal installments of $11,875,000 on the term loan, with the balance due at maturity.

The credit agreement contains a financial covenant requiring maintenance of a minimum consolidated interest coverage ratio of 3 times as of the end of any fiscal quarter. The agreement also requires maintenance of a maximum consolidated leverage ratio of 3.75 times as of the end of any fiscal quarter, which may be increased to 4 times in any quarter ending on or prior to Sept. 30, 2018 if immediately after settlement payment with respect to a pending litigation matter the ratio is greater than 3.5 times on a pro forma basis.

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