GFL Environmental (GFL) Investor Update summary

Transaction overview

• Entered a definitive agreement to sell the Environmental Services business for an $8 billion enterprise value, surpassing initial expectations.

• Expected net cash proceeds of $6.2 billion, with a $1.7 billion equity interest retained for tax efficiency and future value participation.

• GFL will retain a 44% equity interest, with Apollo Funds and BC Partners each holding 28%.

• The transaction is expected to close in Q1 2025, with committed financing in place and no regulatory hurdles anticipated.

• The sale process involved nearly 40 parties, culminating in a partnership with Apollo Funds and BC Partners after a competitive process.

Financial impact and capital allocation

• Up to $3.75 billion of proceeds will be used to repay debt, reducing pro forma net leverage to about 3.0x and annualized cash interest by ~$200 million.

• Up to $2.25 billion in share repurchases are planned to reduce share count and overhang.

• Adjusted EBITDA margin, excluding ES, will approach 29%, with corporate costs reduced by $10–$15 million.

• Free cash flow conversion is expected to accelerate, with interest expense as a percentage of revenue set to decline by over 300 basis points.

• Deleveraged balance sheet supports renewed M&A activity and organic growth investments, enabling annual M&A spend of $1.0 billion.

Deal structure and retained interest

• Retained 44% equity in ES, structured for tax efficiency, reducing the tax bill to $20–$25 million.

• Option to repurchase ES stake solely at the company's discretion within 3.5–5 years, with a buyback formula based on returning just under 2x capital to equity investors.

• Equity roll modeled on private equity returns, potentially doubling or tripling the $1.7 billion equity over five years.

• ES business expected to grow EBITDA from $500 million in 2025 to $875–$950 million in five years through M&A and organic growth.

• No plans to inject additional equity into ES, as the business is expected to be self-sustaining.