SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT
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Item 1.01 Entry into a Material Definitive Agreement
On May 8, 2024, Waste Management, Inc. (the “Company”) amended and restated its revolving credit agreement with a syndicate of banks signatory thereto and Bank of America, N.A., as administrative agent (the “Agent”) (the “Credit Agreement”) to extend the term and maintain available revolving credit to serve U.S. and Canadian needs of the Company and its subsidiaries.
The total commitment under the Credit Agreement is $3.5 billion (plus a $1 billion accordion feature) and the maturity date is May 8, 2029, with the option to request up to two one-year extensions. Waste Management of Canada Corporation and WM Quebec Inc., each a wholly-owned subsidiary of the Company, are co-borrowers under the Credit Agreement, and the Credit Agreement permits borrowing in Canadian dollars up to the U.S. dollar equivalent of $375 million, with such borrowings to be repaid in Canadian dollars. The Credit Agreement also contains a $100 million swing line sub-facility. Waste Management Holdings, Inc., a wholly-owned subsidiary of the Company, guarantees all of the obligations under the Credit Agreement.
The Credit Agreement contains customary representations and warranties and affirmative and negative covenants. The Credit Agreement contains one financial covenant, which sets forth a maximum total debt to consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio. This covenant provides that the ratio of the Company’s total debt to its EBITDA (the “Leverage Ratio”) for the preceding four fiscal quarters will not be more than 3.75 to 1, provided that if an acquisition permitted under the Credit Agreement involving aggregate consideration in excess of $200 million occurs during the fiscal quarter, the Company shall have the right to increase the Leverage Ratio to 4.25 to 1 during such fiscal quarter and for the following three fiscal quarters (the “Elevated Leverage Ratio Period”). There shall be no more than two Elevated Leverage Ratio Periods during the term of the Credit Agreement, and the Leverage Ratio must return to 3.75 to 1 for at least one quarter between Elevated Leverage Ratio Periods. The calculation of all components used in the Leverage Ratio covenant are as defined in the Credit Agreement. The Credit Agreement also contains certain restrictions on the ability of the Company’s subsidiaries to incur additional indebtedness as well as restrictions on the ability of the Company and its subsidiaries to, among other things, incur liens; engage in sale-leaseback transactions; and engage in mergers and consolidations.
The Credit Agreement contains customary events of default, including nonpayment of principal when due; nonpayment of interest, fees or other amounts after a stated grace period; inaccuracy of representations and warranties; violations of covenants, subject in certain cases to negotiated grace periods; certain bankruptcies and liquidations; a cross-default of more than $200 million; certain unsatisfied judgments of more than $200 million; certain ERISA-related events; and a change in control of the Company (as specified in the Credit Agreement). If an event of default occurs and is continuing, the Company may be required to repay all amounts outstanding under the Credit Agreement and cash-collateralize any outstanding letters of credit supported by the Credit Agreement. The Agent, or the banks that hold more than 50% of the commitments under the Credit Agreement, may elect to accelerate the maturity of all amounts due upon the occurrence and during the continuation of an event of default.
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Under the Credit Agreement, the Company is required to pay, quarterly in arrears, (a) an annual facility fee in an amount ranging from .04% to .10% per annum of the $3.5 billion in letter of credit and borrowing availability under the agreement (the “Facility Fee”) and (b) letter of credit fees, payable quarterly, in an amount ranging from .585% to 1.025% per annum of outstanding letters of credit issued under the agreement (the “L/C Fee”). Any borrowings in U.S. dollars under the Credit Agreement (other than borrowings under the swing line facility) will bear interest at a base rate or the secured overnight financing rate as administered by the Federal Reserve Bank of New York (“SOFR”) for the applicable interest period (a “Term SOFR Loan”) plus, in the case of Term SOFR Loans, a credit adjustment spread of .10% per annum, plus the applicable margin for base rate or Term SOFR Loans. Any borrowings in Canadian dollars under the Credit Agreement will bear interest at a base rate or the Canadian Overnight Repo Rate Average as administered by the Bank of Canada (“CORRA”) for the applicable interest period (a “Term CORRA Loan”), plus the applicable margin. Term CORRA Loans are subject to an additional credit adjustment spread of .29547% (one month) and .32138% (three months), each per annum, depending on the applicable interest period. Any borrowings under the swingline facility under the Credit Agreement will bear interest at a fluctuating rate per annum equal to the one-month SOFR plus the applicable margin. In certain instances, the Agent may approve a comparable or successor reference rate pursuant to the Credit Agreement.
The applicable margin under the Credit Agreement, as well as the Facility Fee and L/C Fee under the Credit Agreement, depend on the Company's senior public debt rating, as determined by Standard & Poor's or Moody's. Under the Credit Agreement, (a) the applicable margin for base rate loans in U.S. dollars or Canadian dollars varies between zero and .025% per annum and (b) the applicable margin for Term SOFR Loans, Term CORRA Loans and swing line loans varies between .585% and 1.025% per annum. Based on the Company’s current senior public debt rating, the Facility Fee is .07% per annum; the L/C Fee is .805% per annum; the applicable margin for Term SOFR Loans, swing line loans and Term CORRA Loans is .805% per annum; and the applicable margin for base rate loans is zero.
At closing, the Company had no outstanding borrowings under the Credit Agreement; $872 million in commercial paper borrowings, which are supported by the Credit Agreement; and $180 million in letters of credit issued under the Credit Agreement, leaving unused and available credit capacity of approximately $2.4 billion.
Several of the banks that are party to the Credit Agreement, or their affiliates, have in the past performed, and may in the future from time to time perform, investment banking, financial advisory, lending, brokerage and/or commercial banking services for the Company and its subsidiaries, for which they have received, and may in the future receive, customary compensation and reimbursement of expenses.
The above description of the Credit Agreement is not complete and is qualified in its entirety by reference to Exhibit 10.1 to this Current Report on Form 8-K.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 above is incorporated herein by reference as if fully set forth herein.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit Index
| Exhibit Number |
Description | |
| 10.1 | $3.5 Billion Seventh Amended and Restated Revolving Credit Agreement dated as of May 8, 2024 by and among Waste Management, Inc., Waste Management of Canada Corporation, WM Quebec Inc. and Waste Management Holdings, Inc., certain banks party thereto, and Bank of America, N.A., as administrative agent. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| WASTE MANAGEMENT, INC. | ||
| Date: May 10, 2024 | By: | /s/ Charles C. Boettcher |
| Charles C. Boettcher | ||
| Executive Vice President, | ||
| Corporate Development and Chief Legal Officer | ||