Celanese Corp Form 8-K Summary
Business Context and Reporting Period
This Current Report (Form 8-K) was filed on June 19, 2017, regarding events occurring on June 18, 2017. Celanese Corporation (the "Company") entered into a Transaction Agreement to form a joint venture with affiliates of The Blackstone Group L.P. The venture combines Celanese's cellulose derivatives business with the Rhodia Acetow cellulose acetate business (formerly Solvay, recently acquired by Blackstone).
Key Financial Metrics and Transaction Structure
The filing details the capitalization and financing structure of the proposed Joint Venture rather than Celanese's standalone operating results for a specific period.
- Ownership Structure: Celanese will contribute its cellulose derivatives business for a 70% ownership interest. Blackstone Entities will contribute the Acetow business for a 30% ownership interest. Percentages are subject to adjustment based on asset and liability valuations.
- Debt Financing Commitments: The Joint Venture secured credit facilities totaling approximately $2.405 billion, including:
- $200 million in senior secured and unsecured revolving credit facilities.
- $1,005 million in senior secured term loans.
- $800 million senior unsecured bridge facility (to backstop $800 million in senior unsecured notes).
- $400 million senior unsecured term loan.
- Celanese Guarantees: Celanese will guarantee only the $65 million senior unsecured portion of the revolving credit facilities and the $400 million senior unsecured term loan.
- Short-Term Facility: Celanese arranged a short-term credit facility with Barclays Bank PLC to finance pre-closing distributions, to be repaid upon closing with Joint Venture proceeds.
Material Changes and Conditions
The transaction is subject to customary closing conditions, including:
- Expiration or receipt of antitrust clearances from the European Union and other jurisdictions.
- Completion of internal reorganizations for both businesses.
- Completion of a French works council consultation process regarding the French business.
Until closing, the businesses will operate independently. Distributions at closing will be adjusted based on net working capital, capital spending, cash, debt, and transaction expenses.
Outlook, Risks, and Management Commentary
Management, including CEO Mark C. Rohr and CFO Christopher W. Jensen, scheduled a webcast on June 19, 2017, to discuss the transaction. The filing notes that Non-US GAAP financial measures referenced in the presentation are reconciled to US GAAP in accompanying exhibits.
Risks and Contingencies:
- Termination: The agreement may be terminated if closing is not consummated within one year of signing (extendable by 90 days under certain circumstances).
- Regulatory Approval: Closing is contingent on regulatory approvals which are not yet guaranteed.
- Financing Terms: Various economic terms of the debt financing are subject to change during syndication.
Investor Verification Checklist
- Verify the status of antitrust approvals from the EU and other jurisdictions required for closing.
- Confirm the final ownership percentages after asset and liability valuation adjustments.
- Review the final terms of the debt financing syndication, as economic terms are subject to change.
- Monitor the completion of the French works council consultation process.
- Assess the impact of the transition services and supply agreements on Celanese's remaining operations.