Heritage-Crystal Clean completes $95 million five-year credit facility

By Wendy Van Sickle

Columbus, Ohio, Feb. 27 – Heritage-Crystal Clean, LLC entered into a $95 million five-year credit agreement with Bank of America, NA as administrative agent on Feb. 21, replacing its June 29, 2015 credit agreement, according to an 8-K filing with the Securities and Exchange Commission.

The amendment consists of a $65 million revolving facility and $30 million of term A loans.

BofA Merrill Lynch and Wells Fargo Securities, LLC are the bookrunners and are joined as arrangers by BMO Harris Bank NA. Wells Fargo and BMO Harris are the co-syndication agents, and Compass Bank is the documentation agent.

Borrowings bear interest at Libor plus 175 basis points to 275 bps, depending on the company’s total leverage ratio. At closing, the effective rate was 3.28%.

The commitment fee on the revolver ranges from 30 bps to 50 bps, also based on leverage.

The credit agreement contains customary terms and provisions, including maintaining a minimum interest coverage ratio of 3.5 times and a maximum total leverage of 3 times with a step-up to 3.25 times for the quarter during and the three quarters following a permitted acquisition of at least $100 million.

There is also a capital expenditures covenant limiting capital expenditures to $100 million, plus, if the permitted capital expenditures have been fully used, an additional amount for the remaining term of the agreement equal to 35% of EBITDA for the 13, four-week periods most recently ended immediately prior to the full use of such $100 million basket.

Proceeds may be used to repay debt and for capital expenditures, permitted acquisitions, working capital and general corporate purposes.

Heritage-Crystal is an Elgin, Ill.-based provider of parts cleaning and containerized waste services.

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