VAUGHAN, ON, Sept. 28, 2021 /PRNewswire/ - GFL Environmental
Inc. (NYSE: GFL) (TSX: GFL) ("GFL" or the "Company"), a
leading North American diversified environmental services company,
today provided an update on recent financing initiatives.
GFL announced today that it has amended its revolving credit
facility to, among other things, (a) modify the applicable pricing
grid, resulting in a reduction of GFL's applicable margin by 50
basis points, on a pro forma basis, (b) extend the term by two
years to September 2026, (c) increase
the facility by an additional C$200.0
million, and (d) add a delayed draw term loan of up to
C$500.0 million to finance
acquisitions over the next 12 months.
GFL also
announced that it has entered into
a definitive agreement (the "Subscription Agreement") with
affiliates of HPS Investment Partners, LLC ("HPS")
pursuant to which HPS has agreed to subscribe for up to 8,196,721
Series B Perpetual Convertible Preferred Shares (the "Preferred
Shares") at US$36.60 per share
(the "Private Placement"). GFL has the right to
issue up to an aggregate amount of US$300.0
million of Preferred Shares under the Subscription Agreement
until the end of the year.
The Preferred Shares are initially convertible into 6,830,601
Subordinate Voting Shares, based on the
initial liquidation preference and a conversion price of US$43.92 per share,
representing an approximate 20% premium to the
10 day volume weighted average price of the Subordinate Voting
Shares.
The proceeds from the Private Placement will be used, together
with amounts drawn on the delayed draw term loan, to fund the
Company's robust near-term acquisition pipeline. These
financing initiatives will allow the Company to maintain its
current credit rating profile and leverage within previously stated
ranges.
"We continue to successfully execute on our commitment to reduce
our cost of capital, pursue opportunistic financings to fund our
growth and preserve our leverage, all with a view to increasing our
free cash flow", said Patrick
Dovigi, Founder and Chief Executive Officer of GFL. "Our
recent add-on unsecured bond offering of US$250 million, which was significantly
oversubscribed and priced at 4.000%, as well as the successful
amendment to our credit facility which priced at Libor plus 175
bps, a 50 bps improvement over our current facility, demonstrate
the continued support we have from our institutional debt
investors. We have worked very hard to build their trust as
stewards of their capital and in turn they have supported us in our
growth strategies, allowing us to further pursue our goal of
creating long-term value for all of our stakeholders." Mr. Dovigi
continued, "As we look to the fourth quarter, our acquisition
pipeline is very robust with high quality companies that are
looking to transact before year end. With that in mind, we
felt it was prudent to take these financing steps in
advance to ensure that we can seamlessly execute on our
acquisition opportunities, while maintaining our previously stated
leverage targets." Mr. Dovigi concluded, "Lastly, I also want to
thank HPS, an investor and partner of GFL since 2014, for their
additional equity commitment, further demonstrating their
confidence in our ability to deliver on our strategic goals."
Scot French, Governing Partner of
HPS, said, "We have enjoyed a long and successful partnership with
Patrick and the GFL team over the past eight years and we are
pleased to have the opportunity to provide GFL with incremental
capital to facilitate their continued growth. We have complete
confidence in GFL's management team and business strategy and we
believe that the Company is well positioned to further stand out as
a leader in the North American environmental services
industry."
On September 24, 2021, GFL also
closed its previously announced offering of US$250.0 million in aggregate principal amount of
4.000% senior notes due 2028 (the "Notes"), in a transaction that
was significantly oversubscribed. GFL previously issued
US$500 million in aggregate principal
amount of its 4.000% senior notes due 2028 (the "Existing Notes").
The Notes will be treated as "Additional Notes" under the indenture
governing the Notes and as a single series with the Existing Notes
under such indenture.
Additional Equity Commitment from HPS
Under the terms of the Subscription Agreement, subject to
satisfaction of certain customary closing conditions, GFL has the
right to issue up to an aggregate amount of US$300 million of Preferred Shares from and after
November 8, 2021 to and
including December 31, 2021, on up to
three occasions for incremental amounts of no less than
US$100 million each time.
The 6,830,601 Subordinate Voting Shares initially
issuable upon conversion of the Preferred
Shares represent approximately 2.1% of the issued and outstanding Subordinate Voting Shares and
1.4% of the outstanding voting rights attached
to the Company's shares (including the voting rights attached to
the Series A Preferred Shares (as defined below)), based on the
initial liquidation preference and a conversion price of US$43.92 per share,
which is subject to customary anti-dilution adjustments.
The liquidation preference of the Preferred Shares will
initially accrete at a rate of 6% per annum, compounding quarterly,
increasing the number of Subordinate Voting Shares that each
Preferred Share is convertible therefor, provided that, after year
four, if GFL elects to pay the optional redemption amount (as
described below) for a particular quarter in cash, the accretion
rate for that quarter will be 5% per annum. The accretion rate will
increase after seven years to 7% and after eight years to 8%.
The Preferred Shares are subject to transfer restrictions but
can be converted into Subordinate Voting Shares by the holder
at any time. The Company may force conversion of the Preferred
Shares (a) on or after the three-year anniversary of the closing of
the Private Placement, if the trading price per share of its
Subordinate Voting Shares closes at or above 150% of the
then-applicable conversion price for at least 20 days out of 30
consecutive trading days, (b) on or after the four- year
anniversary of the closing of the Private Placement, if the trading
price per share of its Subordinate Voting Shares closes at or above
140% of the then-applicable conversion price for at least 20 days
out of 30 consecutive trading days and (c) on or after the five-
year anniversary of the closing of the Private Placement, if the
trading price per share of its Subordinate Voting Shares closes at
or above 130% of the then-applicable conversion price for at least
20 days out of 30 consecutive trading days.
GFL may redeem all, but not less than all, of the Preferred
Shares for cash on and after the five-year anniversary of the
closing of the Private Placement for a cash purchase price equal to
(a) prior to the six-year anniversary of the closing of the Private
Placement, 105% of the liquidation preference, (b) on or after the
six-year anniversary, and prior to the seven-year anniversary, of
the closing of the Private Placement, 103% of the liquidation
preference or (c) on or after the seven-year anniversary of the
closing of the Private Placement, at the liquidation preference.
From and after the fourth anniversary of the closing
of the Private Placement, GFL will have the option each quarter to
redeem a number of Preferred Shares in an amount equal to the
increase in the liquidation preference for the quarter. The
optional redemption will be satisfied in either cash or Subordinate
Voting Shares at the election of GFL.
The holders of the Preferred Shares will be entitled to vote on
an as-converted basis for all matters on which holders of
Subordinate Voting Shares and multiple voting shares vote, and to
the greatest extent possible, will vote with
the holders of Subordinate Voting
Shares and multiple voting shares as a
single class.
Closing of the Private Placement is subject to customary
conditions, including approval of the Toronto Stock Exchange
("TSX") and the New York Stock Exchange. The Private
Placement has received approval of the Board of Directors of the
Company. The Company has also obtained the requisite approval
from shareholders holding in the aggregate more than 50% of the
total voting rights of the Company's issued and outstanding shares,
which approval has been evidenced by written consent in accordance
with the requirements set forth in Section 604(d) of the TSX
Company Manual based on the following requirements of the TSX: (a)
potential dilution in excess of 25% of the Company's issued and
outstanding shares which requires shareholder approval pursuant to
Section 607(g) of the TSX Company Manual and relatedly, the Private
Placement materially affecting control (as such term is defined in
the Manual) of the Company which requires shareholder approval
pursuant to section 604(a)(i) of the TSX Company Manual; (b) the
Preferred Share conversion price being potentially below the
allowable discount thresholds, having regard to the accretion to
the liquidation preference, which requires shareholder approval
pursuant to Section 610 of the TSX Company Manual and (c) given the
Company's ability to issue the Preferred Shares on up to three
occasions until the end of the year, the subscription price of the
Preferred Shares being potentially below the allowable discount
thresholds and past the 45 day expiry period provided in Section
610 of the TSX Company Manual.
In October 2020, GFL issued
28,571,428 Series A Perpetual Convertible Preferred Shares (the
"Series A Preferred Shares") to affiliates of HPS. Following the
closing of the Private Placement, the Preferred Shares, together
with the Series A Preferred Shares, will represent approximately
9.2% of the issued and outstanding Subordinate Voting Shares and
6.8% of the outstanding voting rights attached to the
Company's shares, on an as converted basis.
About GFL
GFL, headquartered in Vaughan,
Ontario, is the fourth largest diversified environmental
services company in North America,
providing a comprehensive line of non-hazardous solid waste
management, infrastructure & soil remediation and liquid waste
management services through its platform of facilities throughout
Canada and in 27 states in
the United States. Across its
organization, GFL has a workforce of more than 16,000
employees.
About HPS Investment Partners
HPS Investment Partners
is a leading global investment firm that seeks to provide creative
capital solutions and generate attractive risk-adjusted returns for
our clients. We manage various strategies across the capital
structure that include syndicated leveraged loans and high yield
bonds to privately negotiated senior secured debt and mezzanine
investments, asset-based leasing, and private equity. The scale and
breadth of our platform offers the flexibility to invest in
companies large and small, through standard or customized
solutions. At our core, we share a common thread of intellectual
rigor and discipline that enables us to create value for our
clients, who have entrusted us with approximately $75 billion of assets under management as of
September 2021. For more information,
please visit www.hpspartners.com.
Forward-Looking Information
This release includes certain "forward-looking statements",
including statements relating to the use of proceeds of the
recently completed note offering and Private Placement. In some
cases, but not necessarily in all cases, forward-looking statements
can be identified by the use of forward looking terminology such as
"plans", "targets", "expects" or "does not expect", "is expected",
"an opportunity exists", "is positioned", "estimates", "intends",
"assumes", "anticipates" or "does not anticipate" or "believes", or
variations of such words and phrases or state that certain actions,
events or results "may", "could", "would", "might", "will" or "will
be taken", "occur" or "be achieved". In addition, any statements
that refer to expectations, projections or other characterizations
of future events or circumstances contain forward-looking
statements. Forward-looking statements are not historical facts,
nor guarantees or assurances of future performance but instead
represent management's current beliefs, expectations, estimates and
projections regarding future events and operating performance.
Forward-looking statements are necessarily based on a number of
opinions, assumptions and estimates that, while considered
reasonable by GFL as of the date of this release, are subject to
inherent uncertainties, risks and changes in circumstances that may
differ materially from those contemplated by the forward-looking
statements. Important factors that could cause actual results to
differ, possibly materially, from those indicated by the
forward-looking statements include, but are not limited to, the
"Risk Factors" section of GFL's annual report for the 2020 fiscal
year filed on Form 20-F and GFL's other periodic filings with the
U.S. Securities and Exchange Commission and the securities
commissions or similar regulatory authorities in Canada. These factors are not intended to
represent a complete list of the factors that could affect GFL.
However, such risk factors should be considered carefully. There
can be no assurance that such estimates and assumptions will prove
to be correct. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this
release. GFL undertakes no obligation to publicly update any
forward-looking statement, except as required by applicable
securities laws.
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SOURCE GFL Environmental Inc.