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Littlejohn, Ares Prepping for Potential Sale of Interstate Waste Services

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✨ Summary by AI at Octus
Littlejohn and Ares Management are considering a sale of Interstate Waste Services (IWS), with preliminary discussions held with investment banks like JPMorgan. IWS, based in Teaneck, N.J., generates approximately $250 million in EBITDA and operates in the New York metro area, owning a landfill in Ohio. Ares became a co-owner in 2023, and IWS has expanded through acquisitions under Littlejohn and Ares' ownership. Moody's recently downgraded IWS to B3, citing pressure from elevated leverage, but maintained a stable outlook due to the company's strong market position and expected revenue growth.

Reporting: Benjamin Taubman, Melina Chalkia, Armie Margaret Lee

Littlejohn and Ares Management are preparing to explore a sale of Interstate Waste Services, or IWS, according to sources.

The private equity firms have held preliminary talks with investment banks including JPMorgan, the sources said, with one noting that a sell-side advisor has not been selected.

IWS generates roughly $250 million of EBITDA, sources said.

The Teaneck, N.J.-based company handles collection, transfer, recycling and disposal across the New York metro area and owns a rail-served landfill in Ohio.

Littlejohn invested in IWS in 2020 through a merger that combined The Action Environmental Group with Ohio landfill owner Apex Environmental Resources, according to a press release from the time. GSO Capital Partners, which is part of what is now known as Blackstone Credit & Insurance, led the debt financing for the transaction, which included participation from Comerica Bank and Brightwood Capital.

In 2023, Ares became a co-owner when it purchased a “significant” stake in the company, according to an announcement. Alongside that transaction, a JPMorgan-led arranger group provided a first lien term loan to recapitalize the business.

IWS has made a slew of add-ons under Littlejohn and Ares’ ownership, including its acquisition of Filco Carting and a collection of recycling operators in 2025.

IWS tapped the broadly syndicated loan market in January to upsize and reprice its $1.367 billion SOFR+325 bps term loan B due 2030. The new $1.392 billion SOFR+300 bps loan was last quoted today, July 30, at 99.24/99.71, according to Solve.

In April, Moody’s downgraded IWS to B3 from B2 while maintaining a stable outlook for the borrower, according to a ratings note. The downgrade reflected expectations that the company’s credit profile would remain under pressure due to elevated leverage driven by acquisitions, capital investments and delays in New York City’s commercial waste zoning rollout.

While Moody’s expects the company’s free cash flow to remain negative over the next 12 to 18 months, the stable outlook is supported by its strong market position, anticipated revenue growth, earnings improvements and synergies from recent investments.

Waste management companies exploring sales include Macquarie Asset Management-backed WIN Waste Innovations, Octus reported. WIN, which generates more than $300 million in EBITDA, is working with Nomura Greentech and Macquarie Capital.

Elsewhere in the industrials sector, One Equity Partners announced this month that it had agreed to acquire pipe fabrication and distribution company United WELD Holdings from Bernhard Capital Partners.

Octus had reported in June that One Equity was holding exclusive talks to acquire United Weld for a total enterprise value of about $620 million. Direct lender TCW was in talks to lead a roughly $400 million term loan priced at SOFR+500 bps to back the buyout, as reported.

Littlejohn, Ares and JPMorgan declined to comment. IWS did not respond to a request for comment.

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