| Item 1.01 | Entry into a Material Definitive Agreement. |
On February 9, 2023, Casella Waste Systems, Inc. (the “Company”) entered into a first amendment (the “First Amendment”) and on February 9, 2023 the Company entered into a second amendment (the “Second Amendment”) to its Amended and Restated Credit Agreement dated as of December 22, 2021 (the “Existing Credit Agreement”) by and among the Company, its subsidiaries identified therein, Bank of America, N.A., as administrative agent, swing line lender, letter of credit issuer and lender, and the other financial institutions party thereto (as amended, the “Credit Agreement”). The Credit Agreement, under which the Company and its subsidiaries (subject to certain exceptions) are co-borrowers, provides for a term loan A facility in the principal amount of $350 million (the “Term Loan Facility”) and a revolving credit facility in the principal amount of up to $300 million, with a $75 million sublimit for letters of credit.
The First Amendment provides that, commencing in 2024, the interest rate margin applied for drawn and undrawn amounts under the Credit Agreement shall be separately adjusted based on the Company’s results on two sustainability related key performance indicator metrics (“KPI Metrics”). The first identified KPI Metric is increasing the resource solutions tonnage, as measured by metric tons of solid waste materials reduced, reused or recycled through the Company’s direct operations or with third parties in collaboration with customers. The second identified KPI Metric, related to the health and safety of the Company’s workers, is measured by the Company’s total recordable incident rate. Pursuant to the First Amendment, for each year commencing with the fiscal year ending December 31, 2023, upon the delivery by the Company of a certificate setting forth a calculation of the applicable interest rate adjustments and attaching a verification report from a qualified auditing or consulting firm, a sustainability interest rate adjustment may become effective to adjust the otherwise applicable interest rate margin. Each year, the interest rate margin for drawn amounts shall be separately adjusted for each KPI Metric to increase or decrease by up to 2.0 basis points (or to remain unchanged), and the commitment fee for undrawn amount shall be separately adjusted for each KPI Metric to increase or decrease by up to 0.5 basis points (or to remain unchanged). BofA Securities, Inc. and TD Securities (USA) LLC are designated as Sustainability Coordinators pursuant to the First Amendment.
The Second Amendment amends the Existing Credit Agreement to provide that loans under the Credit Agreement shall bear interest, at Casella’s election, at Term SOFR including a SOFR Adjustment of 10 basis points (“Term SOFR”), or a base rate, in each case, plus an applicable interest rate margin based on consolidated net leverage ratio, and plus or minus any sustainability rate adjustment. After giving effect to the First Amendment and Second Amendment, unless loans are made as or converted to base rate loans, loans under the Credit Agreement shall bear interest at Term SOFR, plus a margin based upon the Company’s consolidated net leverage ratio in the range of 1.125% to 2.125% per annum, plus a sustainability adjustment of up to positive or negative 4.0 basis point per annum, and a commitment fee on undrawn amounts will be charged on undrawn amounts at a rate of Term SOFR, plus a margin based upon the Company’s consolidated net leverage ratio in the range of 0.20% to 0.40% per annum, plus a sustainability adjustment of up to positive or negative 1.0 basis points per annum. The Company
