Item 1.01 Entry into a Material Definitive Agreement.
On
October 11, 2019, Calumet Specialty Products Partners, L.P. (the “Partnership”) and Calumet Finance Corp. (“Finance
Corp.” and, together with the Partnership, the “Issuers”) issued $550.0 million aggregate principal amount of
a new series of the Issuers’ 11.00% Senior Notes due 2025 (the “Notes”) in a private placement conducted pursuant
to Rule 144A and Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). The Notes were
issued at par for net proceeds of approximately $540.0 million, after deducting the initial purchasers’ discount and estimated
offering expenses. The Partnership intends to use the net proceeds from the offering of the Notes, together with borrowings under
its revolving credit facility and cash on hand, to redeem all of its outstanding 6.50% Senior Notes due 2021 and pay related expenses.
The
Notes are governed by an Indenture, dated as of October 11, 2019 (the “Indenture”), entered into by the Issuers and
certain subsidiary guarantors named therein (the “Guarantors”) with Wilmington Trust, National Association, as trustee
(the “Trustee”). The Notes will mature on April 15, 2025. Interest on the Notes is payable semi-annually in arrears
on April 15 and October 15 of each year, beginning on April 15, 2020. The Notes are guaranteed on a senior unsecured basis by
all of the Partnership’s existing subsidiaries (other than Finance Corp. and certain of the Partnership’s immaterial
subsidiaries).
On
and after October 15, 2021, the Issuers may on any one or more occasions redeem all or part of the Notes at the redemption prices
(expressed as percentages of principal amount) set forth below, plus any accrued and unpaid interest to the applicable redemption
date on such Notes, if redeemed during the periods indicated below:
|
Period
|
|
Percentage
|
|
|
October 15, 2021 through April 14, 2023
|
|
|
111.000
|
%
|
|
April 15, 2023 through April 14, 2024
|
|
|
105.500
|
%
|
|
April 15, 2024 and thereafter
|
|
|
100.000
|
%
|
At
any time prior to October 15, 2021, the Issuers may on any one or more occasions redeem up to 35% of the aggregate principal amount
of the Notes issued under the Indenture in an amount not greater than the net proceeds of a public equity offering at a redemption
price of 111.000% of the principal amount of the Notes, plus any accrued and unpaid interest to the date of redemption, provided
that: (1) at least 65% of the aggregate principal amount of the Notes issued under the Indenture remains outstanding immediately
after the occurrence of each such redemption; and (2) the redemption occurs within 180 days of the date of the closing of such
public equity offering.
Prior
to October 15, 2021, the Issuers may on any one or more occasions redeem all or part of the Notes at a redemption price equal
to the sum of: (1) the principal amount thereof, plus (2) the Make Whole Premium, as defined in the Indenture, at the redemption
date, plus any accrued and unpaid interest to the applicable redemption date.
The
Indenture contains covenants that, among other things, restrict the Partnership’s ability and the ability of certain of
its subsidiaries to: (i) incur, assume or guarantee additional indebtedness or issue preferred units; (ii) create liens to secure
indebtedness; (iii) pay dividends on equity securities, repurchase equity securities or redeem subordinated indebtedness; (iv)
make investments; (v) restrict dividends, loans or other asset transfers from its restricted subsidiaries; (vi) consolidate with
or merge with or into, or sell substantially all of its properties to, another person; (vii) sell or otherwise dispose of assets,
including equity interests in subsidiaries; and (viii) enter into transactions with affiliates. These covenants are subject to
important exceptions and qualifications. However, at any time when the Notes are rated investment grade by either of Moody’s
Investors Service, Inc. or S&P Global Ratings and no Default or Event of Default, each as defined in the Indenture, has occurred
and is continuing, many of these covenants will be suspended.
Upon
the occurrence of certain change of control events, as defined in the Indenture, each holder of the Notes will have the right
to require that the Partnership repurchase all or a portion of such holder’s Notes in cash at a purchase price equal to
101% of the aggregate principal amount thereof, plus any accrued and unpaid interest to the date of repurchase.
The
foregoing description of the Indenture is qualified in its entirety by reference to the full text of the Indenture, a copy of
which is filed as Exhibit 4.1 to this report and is incorporated herein by reference.