Moody’s assigns Action Environmental B2

Moody's Investors Service said it assigned the Action Environmental Group, Inc., a subsidiary of Interstate Waste Services, Inc. a B2 corporate family rating and a B2-PD probability of default rating. The agency also assigned a B2 rating to the company's planned $700 million senior secured credit facility. The facility will consist of a $500 million seven-year term loan, a $75 million seven-year delayed draw term loan, and a $125 million five-year revolving credit facility. A stable outlook was also assigned.

“Governance was a key driver in IWS' rating outcome. IWS has aggressive financial policies including an aggressive financial strategy and risk management approach that result in the company's high initial leverage. In addition, the board of directors is largely comprised of representatives from private equity holder and management, with a minority of independent directors,” Moody’s said in a press release.

Term loan proceeds, together with cash from private equity firm Ares Management Corp., will be used to repay debt obligations, pay cash to minority shareholders and add cash to IWS' balance sheet. The $75 million delayed-draw term loan is not expected to be drawn at close.

“The stable outlook reflects Moody's expectation for 3-5% top-line growth over the next year driven by pricing actions. Debt to EBITDA is expected to improve to below 5.5 times by the end of 2024,” the agency said in a statement.

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