Waste Management inversion transaction appears to be proceeding in the face of the recent Treasury debt recharacterization rules

It is proposed that Waste Connections, a NYSE-listed Delaware corporation, will effect a reverse takeover of Progressive Waste Solutions (“Progressive”), a TSX and NYSE-listed OBCA corporation, through a merger of Waste Connections with a Delaware shell sub of Progressive, with Waste Connections as the survivor and with Waste Connections’ shareholders receiving common shares of Progressive so as to end up holding 70% of Progressive. The shares of Progressive will then be consolidated (so that the Waste Connections shareholders have the same number of shares as before) – and Progressive will be renamed Waste Connections by means of amalgamation with a shell Ontario subsidiary with that name.

The obligation to effect the merger is conditional upon Progressive's and Waste Connections' receipt of Code s. 7874 opinions from Weil, Gotshal and Locke Lord, that Code s. 7874 and the Regulations thereunder should not cause Progressive to be treated as a U.S. corporation for Code purposes.

The Circular estimates that the April 4, 2016 U.S. Treasury Department and IRS proposals:

could cause intercompany debt if it were to exceed the currently outstanding debt of Waste Connections to be treated as equity, reducing the amount of deductible interest expense available to the combined company, which could reduce the adjusted free cash flow expected in the first year following the Merger by less than 3%

i.e., maybe not a big deal.

Neal Armstrong. Summary of Progressive Waste Solutions Circular under Other – Continuances/Migrations – Inversions.