Advanced Drainage gets $1.43 billion credit facility, may sell bonds

By Sara Rosenberg

New York, Aug. 1 – Advanced Drainage Systems Inc. initially funded its acquisition of Infiltrator Water Technologies with a new $1,425,000,000 credit facility that was also used to refinance existing debt, according to an 8-K filed with the Securities and Exchange Commission on Thursday.

The company plans to syndicate the loan to a broader group of its core relationship banks and will likely refinance a portion of the loan in the bond market to diversify its capital structure, the filing said.

In addition, Advanced Drainage expects to delever with a mix of cash flow from the business and new equity funding. The company may issue up to $250 million of new equity.

Barclays and Morgan Stanley Senior Funding Inc. arranged the credit facility.

At close, leverage was around 4.4x LTM adjusted EBITDA but the expectation is that leverage will drop to less than 3x within 18 months of closing.

The acquisition closed on July 31.

Infiltrator Water was purchased from Ontario Teachers’ Pension Plan and other stockholders for about $1.08 billion.

On a pro forma basis for the company’s fiscal year ended March 31, 2019, the combined companies would have had revenues of around $1.6 billion, adjusted EBITDA margins of about 20.4% and free cash flow conversion of nearly 50%.

Advanced Drainage is a Hilliard, Ohio-based manufacturer of water management products and solutions for commercial, residential, infrastructure and agricultural applications. Infiltrator Water is an Old Saybrook, Conn.-based provider of plastic leach field chambers and systems, septic tanks and accessories, primarily for use in residential applications.

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