Waste Connections, Inc. (NYSE:WCN), a North American integrated waste services company, announced today that it has completed an offering of C$500 million in senior notes. The notes, bearing an interest rate of 4.50%, are due to mature on June 14, 2029.
The offering, which was conducted under the company's existing shelf registration, was executed on Thursday, June 13, 2024. The notes were offered through a public offering in the United States and on a private placement basis in Canada. Waste Connections intends to use the proceeds from the offering for general corporate purposes, which may include the repayment of existing debt.
Interest on these senior notes will be payable semi-annually on June 14 and December 14, with the first payment due on December 14, 2024. The notes are unsecured and rank equally with Waste Connections' other senior unsecured debt. The notes are not guaranteed by any of the company’s subsidiaries.
The company may redeem the notes at any time before May 14, 2029, at a redemption price that will be the greater of 100% of the aggregate principal amount of the notes or a specified formula based on the present value of remaining payments, plus accrued and unpaid interest. From May 14, 2029, the company has the option to redeem the notes at a redemption price equal to their aggregate principal amount plus accrued and unpaid interest.
Waste Connections also outlined scenarios in which additional amounts may be paid to ensure that holders receive the amount they would have received without the effect of withholding taxes or deductions. If the company is unable to avoid these additional payments, they reserve the right to redeem the notes at 100% of the principal amount, plus accrued interest.
In the event of a change of control, note holders have the right to require Waste Connections to purchase their notes at a price of 101% of the principal amount, plus any accrued interest.
The covenants associated with the notes limit the company's ability to engage in certain activities such as creating liens, entering into sale-leaseback transactions, and merging or selling substantially all of its assets.
The indenture governing the notes includes customary events of default, which, if triggered, could lead to the acceleration of the due date for the principal and interest on the notes.
The notes were issued under an indenture dated November 16, 2018, as supplemented by a ninth supplemental indenture dated June 13, 2024, between Waste Connections and U.S. Bank Trust Company, National Association, as trustee.
In other recent news, Waste Connections has announced a senior notes offering to repay part of its Canadian dollar-denominated debt. This offering, managed by CIBC Capital Markets, TD Securities, and Scotiabank, is contingent on market conditions. Waste Connections has also declared a regular quarterly cash dividend of $0.285 per common share, in line with its strategy of delivering value to its shareholders.
Several analysts have upgraded their price targets for Waste Connections. BMO Capital raised its target from $182 to $186, citing expected margin improvements and potential opportunities from increased mergers and acquisitions activity. RBC Capital also increased its price target from $182 to $196, attributing it to the company's consistent performance and strategic capital allocation. Similarly, Oppenheimer upgraded its price target for Waste Connections to $180 from $170, following investor meetings with the company's CFO.
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