Item 1.01 Entry into a Material Definitive Agreement.
Indenture and Sale of Senior Secured Notes due 2028
On October 14, 2021, LSB Industries, Inc. (the “Company”) completed its previously announced issuance and sale of $500 million aggregate principal amount of its 6.250% Senior Secured Notes due 2028 (the “Notes”). The Notes were issued pursuant to an indenture, dated as of October 14, 2021 (the “Indenture”), by and among the Company, the subsidiary guarantors named therein, and Wilmington Trust, National Association, a national banking association, as trustee and collateral agent (the “Notes Trustee”). The Notes were issued at a price equal to 100% of their face value in a transaction exempt from the registration requirements under the Securities Act of 1933 (the “Securities Act”) and will be resold to eligible purchasers in reliance on Rule 144A under the Securities Act and to non-U.S. persons in accordance with Regulation S under the Securities Act. The Notes will mature on October 15, 2028 and rank senior in right of payment to all of the Company’s debt that is expressly subordinated in right of payment to the notes, and will rank pari passu in right of payment with all of the Company’s liabilities that are not so subordinated, including the Company’s revolving credit facility (the “Revolving Credit Facility”). The Company’s obligations under the Notes are jointly and severally guaranteed by the subsidiary guarantors named in the Indenture on a senior secured basis.
Interest on the Notes accrues at a rate of 6.250% per annum and is payable semi-annually in arrears on May 15 and October 15 of each year, beginning on May 15, 2022, to the holders of record on the immediately preceding May 1 and October 1.
On or after October 15, 2024, the Company may redeem the Notes at its option, in whole or in part, at the redemption prices set forth below, plus accrued and unpaid interest to but excluding the redemption date, on the Notes redeemed during the twelve-month period commencing on October 15 of the years indicated below:
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Year
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Percentage
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2024
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103.125
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%
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2025
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101.563
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%
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2026 and thereafter
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100.000
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%
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Prior to October 15, 2024, the Company may redeem some or all of the Notes at a redemption price of 100% of the principal amount of the notes to be redeemed plus a “make-whole” premium, plus accrued and unpaid interest, if any, to but excluding the redemption date. In addition, the Company may redeem up to 40% of the aggregate principal amount of the notes on or prior to October 15, 2024 with an amount equal to the net cash proceeds of certain equity offerings at a redemption price of 106.250% of the principal amount of the notes to be redeemed plus accrued and unpaid interest, if any, to but excluding the redemption date. If the Company experiences a change of control, it must offer to purchase the notes at 101% of their principal amount, plus accrued and unpaid interest, if any, to but excluding the date of purchase.
The Indenture contains covenants that limit, among other things, the Company and certain of its subsidiaries’ ability to (1) incur additional indebtedness; (2) declare or pay dividends, redeem stock or make other distributions to stockholders; (3) make other restricted payments, including