ALLIED WASTE INDUSTRIES, Scottsdale, Ariz., has put into place all the pieces of a financing plan that the company says will save it about $20 million annually in interest and dividend payments. In March, the firm completed the plan when it finished refinancing its existing credit facility.
The new $3.425 billion credit facility includes a $1.35 billion term loan, a $1.575 billion revolving credit facility and a $500 million institutional letter of credit. The term loan and the letter of credit are both priced at London Interbank Offering Rate (LIBOR) plus 200 basis points. The revolving credit facility is priced at LIBOR plus 300 basis points.
Earlier in the spring, Allied conducted an offering of $600 million of senior notes, $600 million of mandatory convertible preferred stock and $100 million of common stock.
Michael Burnett, vice president of investor relations for Allied, says the new financing plan will benefit the company in several ways. “It virtually eliminates our debt maturities over the next three years,” he says. “It retires portions of our most expensive debt, lowers our average interest rate and gives us ample cushion under our financial covenants. Lastly, it gives us over a billion dollars of available capacity under our revolver, so it's a benefit from a liquidity position as well.”
Taken together, the moves will reduce Allied's annual cash interest payments by $60 million, but increase dividend payments by roughly $38 million a year, resulting in an annual cash benefit of more than $20 million, according to the company.
Allied ranked second in the 2004 annual Waste Age 100, taking in $5.3 billion in revenue in 2003.