| Item 1.01 | Entry into a Material Definitive Agreement. |
On March 7, 2024, Calumet Specialty Products Partners, L.P. (the “Partnership”) and Calumet Finance Corp. (“Finance Corp.” and, together with the Partnership, the “Issuers”) issued $200.0 million aggregate principal amount of a new series of the Issuers’ 9.25% Senior Secured First Lien Notes due 2029 (the “Notes”) in a private placement transaction in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Notes were issued at par for proceeds of $200.0 million, before estimated transaction expenses. The Partnership is using the net proceeds from the private placement of the Notes, together with cash on hand, to redeem all of the Issuers’ outstanding 9.25% Senior Secured First Lien Notes due 2024 (the “2024 Secured Notes”) and $50.0 million aggregate principal amount of the Issuers’ outstanding 11.00% Senior Notes due 2025.
Indenture
The Notes are governed by an Indenture, dated as of March 7, 2024 (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 July 15, 2029. Interest on the Notes is payable semi-annually in arrears on January 15 and July 15 of each year, beginning on July 15, 2024. The Notes are guaranteed on a senior secured basis by all of the Partnership’s existing subsidiaries (other than Finance Corp., the Partnership’s unrestricted subsidiaries, Montana Renewables Holdings LLC and Montana Renewables, LLC, and certain immaterial restricted subsidiaries). The Notes and the guarantees of the 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 restricted 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 January 15, 2025, 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 twelve-month period beginning on January 15 of the years indicated below:
| | | | |
Year | | Percentage | |
2025 | | | 109.250 | % |
2026 | | | 104.625 | % |
2027 and thereafter | | | 100.000 | % |
At any time prior to January 15, 2025, 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 cash proceeds from certain public equity offerings at a redemption price of 109.250% 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 (excluding notes held by the Partnership and its subsidiaries); and (2) the redemption occurs within 180 days of the date of the closing of such public equity offering.
Prior to January 15, 2025, the Issuers may on any one or more occasions redeem all or part of the Notes upon not less than 15 nor more than 60 days’ notice 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.
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