HANOVER, N.H., Sept. 03, 2020 (GLOBE NEWSWIRE) -- CTBH Partners LLC (“CTBH”) is pleased to announce the closing of $40.0 million aggregate principal amount of tax-exempt solid waste industrial revenue bonds for its client, Casella Waste Systems, Inc. (“Casella”) (Nasdaq: CWST). As financial advisor to the borrower, CTBH represented Casella in the issuance of the New York State Environmental Facilities Corporation (the “Issuer”) Solid Waste Disposal Revenue Bonds (Casella Waste Systems, Inc. Project) Series 2020R-1 (the “Bonds”) for the benefit of Casella. The Bonds, rated “B” by S&P Global Ratings and “B2” by Moody’s Investor Service, were issued with an initial fixed interest rate of 2.75% per annum on September 2, 2020 and a mandatory tender date of September 1, 2025. BofA Securities, Inc. served as the underwriter on the transaction.
During the 5-year term fixed interest rate period, the interest rate on the Bonds is 2.75%. The Bonds will mature on September 1, 2050. One or more additional tranches of New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds (Casella Waste Systems, Inc. Project) Series 2020, in the aggregate principal amount of up to $35.0 million, may be issued under the indenture in the future, subject to the terms and conditions of the indenture, market conditions and other factors.
The Bonds are guaranteed under a Guaranty (the “Guaranty”) by substantially all of Casella’s subsidiaries (the “Guarantors”), as required by the terms of a Loan Agreement between the Issuer and Casella (the “Loan Agreement”) pursuant to which the Issuer has loaned the proceeds of the Bonds to Casella. The Bonds are not a general obligation of the Issuer and do not constitute indebtedness of, or a charge against, the general credit of the Issuer. The Bonds are not a debt or pledge of the faith and credit of the State of New York and are payable solely from amounts received from Casella under the Loan Agreement between Casella and the Issuer and from the Guarantors under the Guaranty.
Overview of Private Activity Bonds
Since 1968, private companies and nonprofit organizations have been able to finance qualifying projects by borrowing the proceeds of tax-exempt private activity bonds (“PABs”) issued through a conduit issuer as an alternative to traditional corporate debt. PABs are municipal bonds issued by or on behalf of local or state governments for the purpose of providing special financing benefits for qualified private projects that serve a public purpose, including solid waste disposal facilities. Other qualifying activities under the Internal Revenue Code include airports, docks & wharves, sewage treatment facilities, local district heating, highway or surface freight transfer facilities, and qualified 501(c)(3) capital expenditures, subject to certain conditions set forth in the Internal Revenue Code.
Solid waste PABs are sometimes also referred to as industrial revenue bonds (or “IRBs”). In the context of IRBs, the Internal Revenue Code defines solid waste disposal facilities as “any property or a portion thereof used for the collection, storage, treatment, utilization, processing, or final disposal of solid waste”. Recycling facilities can also qualify in many cases.
The benefits of PABs include (i) potentially significant interest rate savings due to the tax-exempt status of the bonds, (ii) potentially longer-term debt than otherwise available, (iii) the potential of access to an additional pool of investor capital, and (iv) flexible financing structures. However, to receive these benefits, the borrower needs to comply with various federal and state regulatory requirements that may result in smaller bond issuances and a more involved bond issuance process (with pre- and post-issuance compliance requirements) than traditional corporate debt. Nevertheless, the use of PABs is wide spread across multiple industries by publicly traded and privately held companies as well as nonprofit organizations.
Based on internally collected data, the issuance of tax-exempt PABs are most prevalent with (i) healthcare facilities, (ii) colleges and universities, (iii) electric utilities, (iv) oil & gas companies, (v) airlines, as well as (vi) environmental control companies. Collectively, organizations in these industries have approximately $400 billion in tax-exempt PABs outstanding.
About Casella Waste Systems
Casella Waste Systems, Inc., headquartered in Rutland, Vermont, provides solid waste management services consisting of collection, transfer, disposal, and recycling services in the northeastern United States.
About CTBH Partners
CTBH Partners LLC is a top-ranked independent financial advisory firm to the environmental sector, according to The Bond Buyer’s annual review of municipal bond transactions, specializing in corporate tax-exempt debt offerings for companies with qualifying capital expenditures. CTBH is registered as a Municipal Advisor with the Municipal Securities Rulemaking Board and the U.S. Securities and Exchange Commission. CTBH does not engage in any form of underwriting, trading, marketing, or investing in securities.
Since inception, CTBH has provided its consulting services to borrowers on over $250 million of tax-exempt solid waste industrial revenue bonds across six states. For further information, visit the company’s website at https://ctbhpartners.com.
Transaction Contact:
John Ruth
Managing Partner
603.667.3439
jruth@ctbhpartners.com