- Current report filing (8-K)
06 June 2009 - 7:20AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of
earliest event reported):
June 3, 2009
Casella Waste Systems, Inc.
(Exact Name of Registrant as
Specified in Charter)
Delaware
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000-23211
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03-0338873
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(State
or Other Juris-
diction of Incorporation
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(Commission
File Number)
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(IRS
Employer
Identification No.)
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25
Greens Hill Lane
Rutland, Vermont
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05701
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrants telephone
number, including area code:
(802) 775-0325
Not Applicable
(Former Name or Former
Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions (
see
General Instruction A.2. below):
¨
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
¨
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
¨
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Item 1.01 Entry into a
Material Definitive Agreement.
On June 3,
2009,
Casella Waste
Systems, Inc. (Casella or the Company) entered into a Special Waiver
Agreement relating to its Amended and Restated Revolving Credit Agreement,
dated as of April 28, 2005 (the Credit Agreement). The Special Waiver Agreement (the Waiver)
was executed by the Company and each of its Subsidiaries listed on Schedule 1
to the Credit Agreement (collectively, the Borrowers), Bank of America, N.A., the Required
Lenders (as defined in the Credit Agreement), and Bank of America, N.A., as administrative agent for itself and the
other Lenders (in such capacity, the Administrative Agent). Capitalized terms used herein and not otherwise
defined herein shall have the same meanings herein as in the Credit Agreement.
Background of the Waiver
Request
In conjunction with the preparation of its
annual financial statements, Casella is required to perform a test for
impairment of its goodwill and other assets.
Casella has a preliminary balance of $181 million of recorded
goodwill as of April 30, 2009. The Companys policy is to test goodwill as
of April 30 each year or at other times when a triggering event has
occurred. The results of that test will be reflected in the financial
statements for the year ended April 30, 2009.
The Company indicated in its request for the
Waiver, and currently estimates, that it will record a non-cash goodwill
impairment of approximately $55 million.
However, the test for goodwill impairment is ongoing and remains subject
to audit and finalization. The Waiver
request sought covenant relief for a potential impairment of up to the full
$181 million of recorded goodwill (the Goodwill Impairment), although as
indicated in the preceding sentences, the Companys current estimate is
approximately $55 million. During the
process of preparing its annual financial statements, the Company may discover other
assets that are impaired (the Other Asset Impairments). As of the date of the waiver, the Company did
not anticipate any Other Asset Impairments, but it had requested a waiver of
Other Asset Impairments of up to $15 million.
The maximum Goodwill Impairment and Other Asset Impairments described in
this paragraph are referred to for purposes of the Waiver as the Potential
Impairments.
In its request for the Waiver, the Company
also informed the Required Lenders and Administrative Agent that it was
examining the potential need to record an additional valuation allowance of up
to approximately $22 million (excluding any impact of the potential Goodwill
Impairment) on certain of its deferred tax assets in conjunction with its year
end reporting, although the amount of the valuation allowance would not create
a breach of covenants and therefore was not the subject of the Waiver
request. The Company currently estimates
that it will record an additional valuation allowance of $24 million including
the impact of the Goodwill Impairment on the valuation allowance, subject to
audit and finalization. This valuation
allowance would be required as a result of the Companys review of the
recoverability of its deferred tax assets.
As previously disclosed, the Company is
working to refinance its existing credit facility, including issuing debt
sufficient to refinance the existing revolver drawings under the Credit
Agreement and to repay in full the term loan issued under the Credit
Agreement. The Company is seeking to
complete the refinancing during the first fiscal quarter of 2010, following the
issuance of its Annual Report on Form 10-K, through a combination of a
revolving credit facility, term loan B, secured bond or other offering,
depending on market conditions. The
purpose of the Waiver is to enable the Company to proceed in an orderly fashion
with its refinancing in the event that the Company would be in default as a
result of the breach of certain covenants based on the Goodwill Impairment and
Other Asset Impairments. The Company expects that the covenants that will be
contained in the new credit facility will reflect the post-charge valuations.
2
Summary of the Waiver
Pursuant to the Waiver, the Required Lenders
and the Administrative Agent agreed to waive:
(a) solely
for the fiscal quarter ended April 30, 2009, the Borrowers failure (if
any) to comply with the covenant set forth in Section 7.11(a) of the
Credit Agreement (Interest Coverage Ratio) for the four (4) consecutive
fiscal quarters ended April 30, 2009 to the extent such failure results
solely from the Potential Impairments.
(b) solely
for the fiscal quarter ended April 30, 2009, the Borrowers failure (if
any) to comply with the covenant set forth in Section 7.11(b) of the
Credit Agreement (Consolidated Total Funded Debt to Consolidated EBITDA) for
the four (4) consecutive fiscal quarters ended April 30, 2009 to the
extent such failure results solely from the Potential Impairments.
(c) solely
for the fiscal quarter ended April 30, 2009, the Borrowers failure (if
any) to comply with the covenant set forth in Section 7.11(c) of the
Credit Agreement (Consolidated Senior Funded Debt to Consolidated EBITDA) for
the four (4) consecutive fiscal quarters ended April 30, 2009 to the
extent such failure results solely from the Potential Impairments.
(d) solely
through the period ending on July 31, 2009, the Borrowers failure (if
any) to comply with the covenant set forth in Section 7.11(d) of the
Credit Agreement (Consolidated Net Worth) to the extent such failure results
solely from the Potential Impairments.
In addition, the Required Lenders and the
Administrative Agent agreed that, to the extent that the Borrowers audited
financial statements for the fiscal year ended April 30, 2009 include a going
concern or similar qualification solely as a result of the Borrowers failure
to have completed the refinancing described above, any Default or Event of
Default, if any, that may arise as a result of such qualification is hereby
waived.
As the potential charges are non-cash, the
Company does not believe they will have an effect on the operating capabilities
of the Company or its relationship with its customers or other operating
partners during the waiver period. The Company is continuing to explore its
refinancing options for purposes of identifying the optimal structure given
market conditions, and there can be no assurance that any such financing will
be completed on terms that will not limit the Companys ongoing operations, if
at all.
3
SIGNATURE
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.
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CASELLA WASTE SYSTEMS,
INC.
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Date: June 5, 2009
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By:
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/s/ John S. Quinn
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John S. Quinn
Senior Vice President, Chief
Financial Officer and Treasurer
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