Date: August 21, 2006
Source: Safety-Kleen
Company Significantly Increases Capital, Reduces Interest Expense, Extends Maturities
As part of a plan to significantly reduce Safety-Kleen's annual interest expense and enhance the company's capital structure, Safety-Kleen HoldCo., Inc., has completed a major recapitalization of the company.
Under the recapitalization, which included a $100 million rights offering to purchase the company's common stock and a new, six-year $395 million debt facility, Safety-Kleen eliminated its senior subordinated debt, repaid its current bank credit facilities issued in 2005, and redeemed its preferred stock. The new debt facilities significantly increase the company's financial flexibility and reduce interest obligations going forward.
"This is a very significant step in enhancing Safety-Kleen's current financial strength and future profitability," said Frederick J. Florjancic, Jr., the company's President and Chief Executive Officer. "This transaction restructures our long-term debt, which saves $27 million annually in interest, and allows us to continue increasing our profitability and consider acquisitions as part of our growth strategy."
Florjancic noted that 97 percent of the holders of the company's common stock elected to participate in the rights offering and purchase additional equity in the company.
"We see that as a strong vote of confidence in Safety-Kleen's future," Florjancic said.
The new financial package includes:
$230 million term loan;
* $65 million letter of credit facility;
* $100 million revolving credit facility, with no money drawn at closing; and,
* $100 million expansion feature.
"The company's improving operational results over the past 24 months have allowed us to refinance our debt on two occasions," said Dennis McGill, Safety-Kleen's Executive Vice President and Chief Financial Officer. "That has eliminated approximately $45 million in annual interest obligations, which now gives us access to up to $200 million for strategic growth opportunities."
"Our ability to complete this recapitalization, which was enhanced by the solid credit ratings recently issued to Safety-Kleen by Standard & Poor's and Moody's, is a very clear indicator that this company is getting healthier and stronger every quarter," McGill added.
Standard & Poor's and Moody's issued "BB-" and "B1" ratings, respectively, to Safety-Kleen in June, and noted that the ratings are stable.
JP Morgan Securities and Credit Suisse Securities were co-lead arrangers of the Safety-Kleen refinancing.
About Safety-Kleen
Safety-Kleen, a privately held company, is North America's premier provider of industrial oil collection and re-refining, parts cleaner services, and industrial waste management. Safety-Kleen offers its customers a complete set of responsible re-refining, cleaning, and environmental solutions through its fully integrated branch network designed to collect, process, recycle, re-refine, and dispose of a wide range of both hazardous and non-hazardous waste streams. The company has approximately 4,500 employees serving hundreds of thousands of customers in the United States, Canada and Puerto Rico.
Media Contacts:
John Kyte: 972-265-2030
Dennis McGill: 972-265-2020
www.safety-kleen.com/skcda/views/regions/content/content.do?content=4caf007c&channel=de29b592.
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