DBRS Confirms GFL Environmental Inc.’s Issuer Rating and Senior Unsecured Notes Rating

DBRS Limited (DBRS) has today confirmed the Issuer Rating of GFL Environmental Inc. (GFL or the Company) at B with a Stable trend. The confirmation reflects the recent $800 million acquisition of TransForce Inc.’s Matrec solid waste division (the Matrec acquisition), through a combination of equity and debt issuance. The Company’s business risk profile and financial risk profile remain compatible with the current Issuer Rating. Additionally, DBRS has confirmed the Recovery Rating at RR4 and the resultant rating of the Senior Unsecured Notes at B, also with a Stable trend. With these rating actions, DBRS has removed GFL from Under Review with Developing Implications where it was placed on October 29, 2015.

In addition to the Matrec acquisition, DBRS also incorporated GFL’s recently completed acquisition of the Anchor Shoring Group and the definitive agreement to acquire Corporation de Développement Enviro-Viridis Inc. into its decision to confirm the Company’s rating.

DBRS notes that GFL’s business risk profile has strengthened modestly with the Matrec acquisition, which expands the Company’s solid waste business to cover Montréal and other metropolitan areas in Québec. The Matrec acquisition improves the Company’s geographical diversification.

GFL funded the acquisitions through a combination of issuing $458 million of new equity from equity holders, issuance of high yield notes and drawdown on their Amended Credit Facility. GFL announced that the Company issued USD 300 million of Senior Unsecured Notes due 2021. Funding of the acquisitions, as outlined above, resulted in pro forma financial metrics as at September 30, 2015, that did not differ materially from the metrics outlined in DBRS’s last Rating Report.

DBRS determined GFL’s estimated value at default using an EBITDA multiple valuation approach with a 4.0x multiple. Based on the default scenario, the Senior Unsecured Debentures would have an estimated recovery of between 30% and 60%, which aligns with a recovery rating of RR4. Therefore, the instrument rating of the Unsecured Notes is B, the same as the Issuer Rating.

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.