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): December 21, 2004
WCA Waste Corporation
(Exact name of registrant as specified in its charter)
Delaware 000-50808 20-0829917
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
One Riverway, Suite 1400
Houston, Texas 77056
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 292-2400
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:
[ ] 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 December 21, 2004, WCA Waste Systems, Inc. ("WCA Waste Systems"), the
primary operating subsidiary of WCA Waste Corporation ("WCA Waste Corporation"),
amended its Third Amended and Restated Credit Agreement dated as of June 23,
2004 (the "Third Amended Credit Agreement") by entering into a Fourth Amended
and Restated Credit Agreement (the "Fourth Amended Credit Agreement") with Wells
Fargo Bank, National Association ("Wells Fargo"), as administrative agent,
Comerica Bank, as syndication agent, and the lenders party thereto.
The aggregate revolving credit commitments available under the Fourth
Amended Credit Agreement total $160 million and include:
(a) a subfacility for standby letters of credit in the aggregate
principal amount of up to $30.0 million;
(b) a swing line feature for up to $10.0 million for same day
advances; and
(c) a direct pay letter of credit in the aggregate principal amount
of approximately $22.8 million.
The direct pay letter of credit is used to secure the debt associated with
WCA Waste Corporation's tax-exempt environmental facility revenue bonds. The
remainder of the Fourth Amended Credit Agreement will be used for acquisitions,
equipment purchases, landfill construction and development, standby letters of
credit that WCA Waste Corporation must provide in the normal course of its
business, and general corporate purposes. WCA Waste Systems has the right to
increase the commitments under the Fourth Amended Credit Agreement by an
additional $40 million, provided that one or more lenders party to the Fourth
Amended Credit Agreement or one or more new lenders approved by WCA Waste
Systems provides such increase and certain other conditions are satisfied. As of
December 22, 2004, the closing date of the Fourth Amended Credit Agreement, WCA
Waste Systems had $73.2 million outstanding under the various facilities and
letters of credit, leaving it with $86.8 million in availability under the
Fourth Amended Credit Agreement. WCA Waste Systems must make mandatory
prepayments of outstanding indebtedness under the Fourth Amended Credit
Agreement in the amount of 100% of the net cash proceeds received from the
issuance of debt or equity securities by WCA Waste Corporation or its
subsidiaries.
The Fourth Amended Credit Agreement will mature on December 21, 2009 unless
the commitments thereunder are terminated or prepaid in full at an earlier date.
WCA Waste Systems' obligations under the Fourth Amended Credit Agreement are
secured by the same assets that secured obligations under the Third Amended
Credit Agreement and are guaranteed by certain material subsidiaries of WCA
Waste Corporation. Obligations under the Fourth Amended Credit Agreement are
recourse obligations and are subject to cancellation and/or acceleration upon
the occurrence of certain events, including, among other things, a change of
control (as defined in the Fourth Amended Credit Agreement), nonpayment,
breaches of representations, warranties and covenants (subject to cure in
certain instances), bankruptcy or insolvency, defaults under other debt
arrangements, failure to pay certain judgments and the occurrence of events
creating material adverse effects.
Indebtedness under any base rate loans (as defined in the Fourth Amended
Credit Agreement) carries interest at the higher of (i) the effective federal
funds rate (as defined in the Fourth Amended Credit Agreement) plus 1/2 of 1% or
(ii) the rate of interest from time to time announced publicly by Wells Fargo,
in San Francisco, California as its prime rate, plus the applicable margin for
base rate loans (ranging from 0.75% to 2.00% depending on the leverage ratio).
Indebtedness under any LIBOR loans (as defined in the Fourth Amended Credit
Agreement) carries interest at a rate per year (rounded upwards, if necessary,
to the nearest 1/16 of 1%) determined by the administrative agent to be equal to
the quotient of (a) LIBOR (as defined in the Fourth Amended Credit Agreement)
divided by (b) one minus the reserve requirement (as defined in the Fourth
Amended Credit Agreement), plus the applicable margin for LIBOR loans (ranging
from 1.75% to 3.00% depending on the leverage ratio). The commitment fee payable
by WCA Waste Systems to the administrative agent on the daily average unused
amount of the aggregate revolving credit commitment under the Fourth Amended
Credit Agreement ranges from 0.250% to 0.500% depending on WCA Waste Systems'
leverage ratio.
The maximum leverage ratio (funded debt/pro forma adjusted EBITDA) under
the Fourth Amended Credit Agreement is 4.75 to 1.00 until December 31, 2006 and
4.50 to 1.00 thereafter. The minimum net worth (as defined in the Fourth Amended
Credit Agreement) under the Fourth Amended Credit Agreement is 85% of net worth
on June 30, 2004, plus 50% of positive net income, plus 100% of the increase to
net worth from the net cash proceeds from future equity offerings. The maximum
permitted senior funded debt leverage ratio (senior funded debt/pro forma
adjusted EBITDA) under the Fourth Amended Credit Agreement starts at 4.25 to
1.00 through and including the fiscal quarter ending December 31, 2005 and
adjusts at various times until it reaches 3.25 to 1.00 after September 30, 2008.
The Fourth Amended Credit Agreement amends the Third Amended Credit
Agreement by replacing the financial covenant of fixed charge coverage ratio
with the financial covenant of adjusted EBIT debt service ratio. Adjusted EBIT
debt service ratio is the ratio of (i) adjusted EBIT (as defined in the Fourth
Amended Credit Agreement) for the four fiscal quarters ending on such date to
(ii) cash interest payments, plus (y) the current portion of capitalized leases
for the following four fiscal quarters, plus (z) the current portion of
principal payments of debt (as defined in the Fourth Amended Credit Agreement),
excluding payments under the revolving credit notes (as defined in the Fourth
Amended Credit Agreement), required to be paid for the following four fiscal
quarters. The required minimum adjusted EBIT debt service ratio under the Fourth
Amended Credit Agreement starts at 1.25 to 1.00 until the fiscal quarter ending
March 31, 2006 and increases at various times until it reaches 1.75 to 1.00 for
periods after September 30, 2007.
Under the Fourth Amended Credit Agreement, there is no limit for
acquisition or expansion capital expenditures provided that the leverage ratio
remains below 3.00 to 1.00 and $10 million is available under the Fourth Amended
Credit Agreement after the applicable expenditure. However, if the leverage
ratio exceeds 3.00 to 1.00, (a) the amount of acquisition expenditures shall be
limited to $15 million per acquisition unless expenditures above that amount are
approved by a majority of the lenders and (b) the amount of expansion capital
expenditures shall be limited to $20 million per year.
Other covenants in the Fourth Amended Credit Agreement are comparable to
the covenants in the Third Amended Credit Agreement as described in WCA Waste
Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30,
2004 as filed with the Securities and Exchange Commission on November 10, 2004.
Included in such covenants is a prohibition against the payment of cash
dividends by WCA Waste Systems to WCA Waste Corporation (or any intermediary)
under all circumstances, meaning WCA Waste Corporation has very limited sources
of cash. WCA Waste Corporation's only source of cash to pay dividends is
distributions from its subsidiaries and, therefore, its ability to declare or
pay future cash dividends on its common stock would be subject to, among other
factors, a relaxation of this prohibition.
Some of the lenders and their affiliates have performed investment banking,
financial advisory and other commercial services (including serving as agents
and lenders under prior credit agreements) for WCA Waste Corporation and its
affiliates in the ordinary course of business from time to time for which they
have received customary fees and expenses. The lenders and their affiliates may,
from time to time in the future, engage in transactions with and perform such
services for WCA Waste Corporation and its affiliates in the ordinary course of
business for which they will receive customary fees.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under
an Off-Balance Sheet Arrangement of a Registrant.
The description of the Fourth Amended Credit Agreement contained in Item
1.01 of this report is hereby incorporated by reference into this Item 2.03.
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.
WCA WASTE CORPORATION
Date: December 28, 2004 /s/ Charles A. Casalinova
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Charles A. Casalinova
Senior Vice President and Chief Financial
Officer