Earlier today, Republic Services Inc. (RSG) announced the commencement of a private offering of $500 million of senior notes due 2019.

The company said that the net proceeds from the offering will be used for certain outstanding senior notes maturing in 2010 and 2011 to reduce amounts outstanding under its revolving credit line and to make estimated tax payments related to its asset divestitures in connection with its merger with Allied Waste Industries.

During the second quarter conference call, the company said that it has closed or signed contracts on all assets that are required to be divested. Total pretax proceeds are expected to exceed $475 million, and the company has already received $424 million, from divestitures. The company is using the proceeds from divestitures to reduce debt.

The company is progressing well on integration process. Republic Services achieved run-rate synergies of $115 million in the first half, exceeding the 2009 run-rate target of $100 million. Now, the company expects to realize run-rate synergies of $125 million by the end of 2009 and total synergies of around $165 million to $175 million by the end of 2010.

Given the higher-than-expected synergy gains in the first half, the company raised its free cash flow guidance for the year. Republic Services now expects full year free cash flow of $700-$750 million. The company will use the free cash flow to further pay down debt.

Republic Services, Inc. is a leading provider of solid waste collection, transfer and disposal services in the United States. The company merged with Allied Waste Industries, Inc. in December 2008.
Read the full analyst report on “RGS”
Zacks Investment Research