Item 1.01 Entry into a Material Definitive Agreement.
Exchange Offer and Consent Solicitation
On August 5, 2020 (the “Settlement
Date”), Calumet Specialty Products Partners, L.P. (the “Partnership”) and Calumet Finance Corp. (“Finance
Corp.” and, together with the Partnership, the “Issuers”) completed their previously announced (i) private exchange
offer (the “Exchange Offer”), pursuant to which approximately $200 million aggregate principal amount of the Issuers’
7.625% Senior Notes due 2022 were validly tendered by and accepted for exchange from eligible holders for aggregate consideration
consisting of $200 million aggregate principal amount of newly issued 9.25% Senior Secured First Lien Notes due 2024 (the “New
Notes”), and (ii) solicitation of consents (the “Consent Solicitation”) from holders of the Issuers’ outstanding
11.00% Senior Notes due 2025 (the “2025 Notes”) to allow the Issuers to consummate the Exchange Offer.
Indenture
The New Notes are governed by an Indenture,
dated as of the Settlement Date (the “Indenture”), entered into by the Issuers and certain subsidiary guarantors named
therein with Wilmington Trust, National Association, as trustee (the “Trustee”). The New Notes will mature on July
15, 2024. Interest on the New Notes is payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January
15, 2021. The New Notes are guaranteed on a senior basis by all of the Partnership’s existing subsidiaries (other than Finance
Corp. and certain immaterial subsidiaries) and all of the Partnership’s future restricted subsidiaries (other than Finance
Corp. and certain immaterial subsidiaries). The New Notes and the guarantees of the New Notes are secured by a first priority lien
(subject to certain exceptions) on all of the fixed assets that secure the Partnership’s and its subsidiaries’ obligations
under their secured hedge agreements, including, subject to certain exceptions, certain present and future real property, fixtures
and equipment; certain United States registered patents and patent license rights, trademarks and trademark license rights, copyrights
and copyright license rights and trade secrets; certain chattel paper, documents and instruments; cash deposits in the PP&E
proceeds account; certain books and records; and all accessions and proceeds of any of the foregoing.
On and after July 15, 2021, the Issuers
may on any one or more occasions redeem all or a part of the New 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 New Notes, if redeemed
during the twelve-month period beginning on July 15 of the years indicated below:
Year
|
|
|
Percentage
|
|
|
2021
|
|
|
|
109.250
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%
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2022
|
|
|
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104.625
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%
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2023 and thereafter
|
|
|
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100.000
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%
|
At any time prior to July 15, 2021, the
Issuers may on any one or more occasions redeem up to 35% of the aggregate principal amount of the New Notes issued under the Indenture
in an amount not greater than the net proceeds of a public equity offering at a redemption price of 109.250% of the principal amount
of the New Notes, plus any accrued and unpaid interest to the date of redemption, provided that: (i) at least 65% of the aggregate
principal amount of the New Notes issued under the Indenture remains outstanding immediately after the occurrence of each such
redemption; and (ii) the redemption occurs within 180 days of the date of the closing of such public equity offering.
Prior to July 15, 2021, the Issuers may
on one or more occasions redeem all or part of the New Notes at a redemption price equal to the sum of: (i) the principal amount
thereof, plus (ii) 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) sell assets;
(ii) pay distributions on, redeem or repurchase the Partnership’s units or redeem or repurchase its subordinated debt or
unsecured notes; (iii) make investments; (iv) incur or guarantee additional indebtedness or issue preferred units; (v) create or
incur certain liens; (vi) enter into agreements that restrict distributions or other payments from the Partnership’s restricted
subsidiaries to the Partnership; (vii) consolidate, merge or transfer all or substantially all of the Partnership’s assets;
(viii) engage in transactions with affiliates; and (ix) create unrestricted subsidiaries. These covenants are subject to important
exceptions and qualifications. However, at any time when the New Notes are rated investment grade by either of Moody’s Investors
Service, Inc. or Standard & Poor’s Ratings Services 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.
1
Upon the occurrence of certain change
of control events, as described in the Indenture, each holder of the New Notes will have the right to require that the Issuers
repurchase all or a portion of such holder’s New 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 descriptions of the Indenture
and the New Notes do not purport to be complete and are qualified in their entirety by reference to the full text of the Indenture
(including the form of New Notes attached as an exhibit thereto), a copy of which is filed as Exhibit 4.1 to this report and is
incorporated herein by reference.
Supplemental Indenture
In connection with the Exchange Offer
and Consent Solicitation, on the Settlement Date, the Issuers, certain subsidiary guarantors and the Trustee entered into the First
Supplemental Indenture (the “Supplemental Indenture”) to the indenture governing the 2025 Notes to adopt certain amendments
to allow the Exchange Offer.
The foregoing description of the Supplemental
Indenture does not purport to be complete and is qualified in its entirety by reference to the full text of the Supplemental Indenture,
a copy of which is filed as Exhibit 4.3 to this report and is incorporated herein by reference.
Amendment to Collateral Trust Agreement
In connection with the Exchange Offer
and issuance of the New Notes, on July 31, 2020, the Issuers and the guarantors under the Indenture (other than Calumet Montana
Refining, LLC) entered into an amendment (the “Amendment”) to the Collateral Trust Agreement (the “Collateral
Trust Agreement”) with Wilmington Trust, National Association, as collateral trustee (in such capacity, the “Collateral
Trustee”), the Trustee and the representatives of certain other holders of Parity Lien Obligations (as defined in the Collateral
Trust Agreement). Among other changes, the Amendment changed certain references to the Issuers’ previously redeemed 11.5%
Senior Secured Notes due 2021 (the “Prior Secured Notes”) and the indenture governing the Prior Secured Notes to instead
refer to the New Notes and the Indenture, eliminated certain perfection and further assurances requirements regarding certain real
property located in Wall Township, New Jersey and provided that Calumet Montana Refining, LLC shall not be required to become a
party to the Collateral Trust Agreement.
The foregoing description of the Amendment
does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, a copy of which
is filed as Exhibit 10.1 to this report and is incorporated herein by reference.