S&P lowers rating on Waste Connections
NEW YORK (AP) — Standard & Poor's Ratings Services on Friday lowered its rating on solid waste services company Waste Connections Inc. because of its plan to acquire R360 Environmental Solutions Inc. for about $1.3 billion in cash.
S&P lowered its corporate credit rating on Waste Connections one step from "BBB" to "BBB-," which is still investment grade. The outlook is stable. It also removed Waste Connections from CreditWatch, where the company was placed with negative implications Sept. 17 when the acquisition was announced.
S&P credit analyst James T. Siahaan said the additional debt that Waste Connections is expected to incur to finance the acquisition "will hurt its financial risk profile to some extent." He called it an "intermediate risk."
"We believe the company intends to issue a sizeable unrated term loan and to borrow a substantial amount on its unrated revolving facility," the analyst wrote in a note published Friday.
Based in The Woodlands, Texas, Waste Connections has said that the acquisition of R360 will provide it with an opportunity to grow more rapidly. R360 offers non-hazardous oilfield waste treatment, recovery and disposal services in several parts of the country.
The acquisition is expected to close in the fourth quarter.
Shares of Waste Connections fell 23 cents to close at $31.49. The price has ranged from $28.70 to $35.95 per share in the past 52 weeks.