Skip to main content

The Globe and Mail

Tervita’s $290-million financing gets rough rating

An oil sands operation in Alberta.

In its first financing announcement since rumours of a pending initial public offering swirled this summer, Tervita Corp. is issuing $290-million (U.S.) of senior unsecured notes.

The kicker: they're rated CCC+ by Standard & Poor's.

In a report explaining its rating, S&P noted "high debt leverage due to management's aggressive financial policy" as well as the firm's "participation in the competitive and cyclical oilfield services market, and lack of long-term contracts." As of June 30, Tervita's senior secured debt was 4.5 time its earnings before interest, taxes, depreciation and amortization.

Story continues below advertisement

S&P's overall corporate credit rating for Tervita is B-.

Tervita, formerly CCS Corp., will use most of the proceeds to repay revolving credit facilities. This is the first time the firm has tapped debt markets since it attempted to raise $675-million in the summer of 2011 to repurchase bonds with 11 per cent coupons. That financing ultimately got shelved because of adverse market conditions.

In January, Tervita took out a $200-million incremental term loan under its existing facilities to repay its revolver.

In its own review, Moody's said it expects Tervita to have negative free cash flow of $40-million through the third quarter of 2013. The firm also needs to refinance its $1.5-billion term loan by November 2014.

CCS was taken private in a contentious $3.5-billion buyout in 2007, led by founder David Werklund. Typically, private investors like to cash in on their investments around the five-year mark.

Report an error Licensing Options
About the Author
Reporter and Streetwise columnist

Tim Kiladze is a business reporter with The Globe and Mail. Before crossing over to journalism, he worked in equity capital markets at National Bank Financial and in fixed-income sales and trading at RBC Dominion Securities. Tim graduated from Columbia University's Graduate School of Journalism and also earned a Bachelor in Commerce in finance from McGill University. More

Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at privacy@globeandmail.com.