(Bloomberg) – GFL Environmental Inc., a waste management company whose main shareholder is investment firm BC Partners, plans to debut in the green bond market as the company seeks to digest a frenzy of acquisitions and reduce debt costs.
The Vaughan, Ontario-based company could go ahead with the transaction to fund projects such as building large organics processing facilities similar to those the company has built in British Columbia and Ottawa. CEO Patrick Dovigi said in an interview.
“We believe there will be a few projects that actually qualify for this program,” Dovigi said, adding that a possible green bond could be valued at a lower yield than its ordinary securities.
GFL, which completed about $ 4 billion in mergers and acquisitions in 2020, is looking to cut interest rates on its debt. The company is considering selling green bonds at a time when the issuance of this debt is reaching record levels, partly driven by a so-called greenium, which allows borrowers to earn lower yields than comparable conventional securities. .
While GFL would be a new company for green bond investors, it is a regular borrower in high yield debt markets. In December, the company – which operates in Canada and 27 U.S. states – issued $ 750 million in bonds at 3.5% par, according to data compiled by Bloomberg.
The company plans to build three large organics processing facilities at a cost of around C $ 50 million to C $ 60 million each, Dovigi said. The facilities – two of which will be located in the United States and one in Canada – are expected to be deployed over the next two years.
After publishing its first sustainability report last year, GFL is in the process of setting specific environmental, social and governance goals. Even though the specific metrics are expected to be released next year, the company is increasing the diversity of its board of directors. Last month, the company hired Violet Konkle, a former executive at companies such as Walmart Canada, as an independent director, and is currently looking for another woman, Dovigi said.
GFL was challenged last year after hedge fund Spruce Point Capital Management LLC alleged the company needed new capital injections and questioned its accounting. GFL called the allegations “misleading and false statements”. Spruce Point extensively reiterated its allegations in a September 23 letter to Paolo Notarnicola, who chairs the nomination, governance and compensation committee of GFL’s board of directors and is a member of the management of BC Partners.
“I can tell you that we took it very seriously, so we came back with a thorough review,” Notarnicola said in an interview. The conclusion was that “there was absolutely nothing to worry about,” he said.
GFL’s share price has risen more than 65% since the close the day Spruce Point – which at the time said it was short in the company’s shares – released its allegation in August. Spruce Point officials did not respond to requests for comment on their views on GFL and whether they continue to hold a short position on GFL.
(Updates the share price increase in the last paragraph. A previous version of the story corrected the spelling of the GFL board member in the 7th paragraph.)
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