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
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
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
On
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
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
In
About GFL
GFL, headquartered in
About
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
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