S&P rates Interstate Waste, loans B

S&P said it assigned B ratings to Interstate Waste Services Inc. and its planned first-lien senior secured credit facilities, which will include a $125 million revolving credit facility due in 2028, a $500 million term loan due in 2030, and a $75 million delayed-draw term loan due in 2030. Subsidiary Action Environmental Group Inc. will issue the loans. The outlook is stable.

Privately owned IWS reported an equity and debt recapitalization with a proposed issuance of first-lien senior secured debt and planned common equity investment by private equity firm Ares Management and co-investors.

“Following the close of the transaction, we expect IWS' leverage to be high but improve over the next 12-18 months. We assess the proposed capital structure, if executed as planned, as highly leveraged, with S&P Global Ratings-adjusted debt to EBITDA above 6.5x at the end of 2023 but improving below 6.5x during 2024,” the agency said in a press release.

“Pro forma for the recapitalization transaction, we expect IWS to be largely owned by two financial sponsors: Littlejohn & Co. and new incoming sponsor Ares. We do not anticipate material deleveraging soon given the expectation of aggressive financial policies we associate with financial sponsor ownership. We note the two sponsors have a communicated goal of maintaining prudent leverage and a robust liquidity profile,” S&P said.

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