DBRS Places GFL Environmental Inc. Under Review with Developing Implications

DBRS Limited (DBRS) has today placed the Issuer Rating and Senior Unsecured Notes rating of GFL Environmental Inc. (GFL or the Company) Under Review with Developing Implications following the Company’s announcement that it has entered into a definitive agreement with Transforce Inc. (Transforce) to buy Transforce’s Matrec solid waste division for $800 million. The Matrec division is expected to generate approximately $82 million of EBITDA in 2015 pre-synergies. The transaction is subject to certain regulatory approvals and contractual consents. GFL and Transforce will work together to obtain the required approvals and expect to close the transaction by February 1, 2016.

GFL intends to fund the balance of the purchase price through a combination of new equity from new and existing equityholders, term bank debt and issuance of high yield notes. As part of the new equity, $100 million is expected to be satisfied by the issuance to Transforce of shares of GFL, subject to certain closing conditions. GFL anticipates that funding of the acquisition will result in pro forma leverage consistent with its current level.

The rating action reflects the size of the transaction compared with the size of the Company’s asset base and the lack of detailed information on how the Company plans to finance the acquisition. DBRS will resolve the Developing Implications once the transaction has closed.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

The applicable methodologies are Rating Companies in the Services Industry and DBRS Recovery Ratings for Non-Investment Grade Corporate Issuers, which can be found on our website under Methodologies.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.