Montrose Environmental Group entered into a new sustainability-linked credit agreement. Bank of the West is the administrative agent for the loans as well as the swing line lender, L/C issuer and joint lead arranger. Capital One and Bank of America Securities acted as joint lead arrangers.
Under the terms of the credit agreement, the lenders agreed to extend credit to Montrose in the form of a $175 million term loan and a $125 million revolving credit facility. Montrose used net proceeds from the term loan and $42 million in borrowings under the revolver to repay all of its $175 million of outstanding borrowings under its former term loan and former revolver and related fees and expenses.
Borrowings under the new credit facility bear interest at a rate of, at the option of Montrose, a floating rate of either a base rate or LIBOR plus a spread of between 1.5% and 2.5%, in the case of LIBOR, or 1.5% to 0.5%, in the case of the base rate, based on the company’s net leverage ratio. The opening spread of LIBOR plus 2% reduces the previous term loan interest rate of LIBOR plus 5.5%.
Additionally, by entering into the new credit facility, Montrose will receive up to a five basis point pricing adjustment based on its performance against certain sustainability and ESG related objectives pursuant to the agreement. The agreement establishes benchmarks in four key areas, the first of which pertains to diversity and inclusion objectives at the company. The three other benchmarks are directly related to the company’s environmental focus serving customers, including liters of water treated for PFAS, volume of methane leaks detected and the amount of low-carbon intensity energy (MMBtu biogas) generated from waste. Sustainability and ESG performance will be measured and communicated in the company’s annual sustainability report.
“ESG is a focus of our business and we are delighted to announce the strengthening of our capital structure with our inaugural sustainability-linked credit facility,” Allan Dicks, CFO of Montrose Environment Group, said. “This new debt structure directly aligns with our commitment to sustainability and innovation while also helping us secure an attractive cost of financing and significantly expanding our debt capacity. We thank our new and existing lenders for their continued support and confidence in our industry-leading environmental solutions.”
