| Item 1.01. | Entry into a Material Definitive Agreement. |
On December 3, 2020, Kraton Corporation (the “Parent”) and certain of its subsidiaries entered into a First Amendment to the Second Amended and Restated Loan, Security and Guarantee Agreement (the “Amendment”), among Kraton Polymers U.S. LLC (“Kraton Polymers”), Kraton Chemical, LLC (together with Kraton Polymers, the “U.S. Borrowers”), Kraton Polymers Nederland B.V. (the “Initial Dutch Kraton Borrower” and, together with the U.S. Borrowers, the “Borrowers”), the Parent and certain other subsidiaries of the Parent, as guarantors (together with the Borrowers and the Parent, the “Guarantors”), Bank of America, N.A., as administrative agent, collateral agent and security trustee (the “Agent”) and the other financial institutions from time to time party thereto as lenders (the “Lenders”). The Amendment amends the Second Amended and Restated Loan, Security and Guarantee Agreement, dated as of April 15, 2020, among the Borrowers, the Parent and certain other subsidiaries of the Parent, as guarantors, the Agent and the financial institutions from time to time party thereto as lenders (as amended, the “Loan Agreement”).
Pursuant to the Amendment, total commitments under the Loan Agreement were increased to $300 million (increased from $250 million), initially consisting of:
| | (1) | a $210 million U.S. senior secured revolving credit facility (the “U.S. Revolving Facility”); and |
| | (2) | a $90 million Dutch senior secured revolving credit facility (the “Dutch Revolving Facility”). |
Commitments under the U.S. Revolving Facility and the Dutch Revolving Facility may be reallocated subject to certain conditions, provided that commitments under the Dutch Revolving Facility may not exceed $100 million.
The Amendment also extends the termination date of the Loan Agreement from January 6, 2023 to December 3, 2025 (subject to earlier termination if certain outstanding indebtedness under the Parent’s senior secured term loan facility and senior unsecured notes are not previously refinanced on the terms set forth in the Amendment).
Following the effective date of the Amendment, borrowings under the U.S. Revolving Facility will continue to bear interest at a rate equal to, at the applicable U.S. Borrower’s option, either (a) a base rate or (b) a rate based on LIBOR (subject to a 0.25% floor (decreased from 1%)), in each case, plus an applicable margin. Dutch borrowings under the Dutch Revolving Facility will continue to bear interest at a rate equal to, at the applicable Borrower’s option, either (a) a fluctuating rate, with respect to Euros, Pounds Sterling and Dollars outside of the U.S. and Canada, equal to the base rate by the local branch of Bank of America, N.A. in the jurisdiction in which such currency is funded or (b) a rate based on LIBOR, in each case plus an applicable margin. The applicable margin is based on excess availability and ranges from (i) 0.5% to 1% for U.S. base rate loans (decreased from 1% to 1.5%) and (ii) 1.5% to 2% for European base rate loans, LIBOR loans and letter of credit fees (decreased from 2% to 2.5%) following the effective date of the Amendment. The Amendment also decreases the commitment fee paid by the Borrowers in respect of unutilized commitments to an annual rate of 0.25% (decreased from 0.375%).
The Agent and certain Lenders under the Loan Agreement have in the past engaged, and may in the future engage, in transactions with and perform services, including commercial banking, financial advisory and investment banking services, for the Parent, the Borrowers and the other Guarantors and their affiliates in the ordinary course of business for which they have received or will receive fees and expenses.
The foregoing summary does not purport to be complete and is subject to, and qualified in its entirety, by the full text of the Amendment, attached to this Current Report on Form 8-K as Exhibit 10.1 and incorporated by reference into this Item 1.01.
