Huntsman Corporation 8-K Summary
Business Context and Reporting Period
This Form 8-K was filed on April 16, 2009, by Huntsman Corporation and its wholly-owned subsidiary, Huntsman International LLC. The report details the entry into a material definitive agreement regarding the company's credit facilities.
Key Financial Metrics and Covenant Terms
The filing does not provide specific revenue, profit, or cash flow figures for the period. However, it outlines critical financial covenant terms agreed upon with lenders:
- Senior Secured Leverage Ratio: The maximum ratio is capped at 5.00 to 1.00.
- EBITDA Adjustments: The calculation of Consolidated EBITDA now permits the add-back of lost profits attributable to Hurricanes Gustav and Ike (2008).
- Impairment Charges: The threshold for "Permitted Non-Cash Impairment and Restructuring Charges" was increased from $100,000,000 to $200,000,000.
- Debt Restrictions: The company agreed not to reduce the principal amount of its intercompany promissory note below $525,000,000 while revolving loans are outstanding.
Material Changes and Agreement Details
On April 16, 2009, Huntsman International LLC entered into a Waiver with a majority of its revolving lenders under the Credit Agreement (originally dated August 16, 2005). Key changes include:
- Covenant Waiver: Lenders waived compliance with the financial covenant from the effective date through June 30, 2010.
- Cost of Waiver: The Borrower agreed to pay a waiver fee and increased facility and undrawn commitment fees.
- Borrowing Restrictions: If the Senior Secured Leverage Ratio is not met in a fiscal quarter, the company cannot request new borrowings under the Revolving Facility for the succeeding quarter.
- Restricted Payments: Restricted payments are capped at $100,000,000 plus Available Equity Proceeds.
Outlook, Risks, and Management Commentary
The filing indicates that the company is managing liquidity and covenant compliance in the aftermath of 2008 hurricanes and potential restructuring charges. The agreement imposes strict limitations on principal repayments and restricted payments to maintain lender confidence. The filing references a press release (Exhibit 99.1) for further management commentary, but the text of the press release is not included in this document.
Key Facts for Investor Verification
- Verify the specific amount of the waiver fee and the exact increase in facility fees.
- Confirm the current Senior Secured Leverage Ratio to assess proximity to the 5.00 to 1.00 cap.
- Review the full text of the press release (Exhibit 99.1) for management's outlook on the 2009 fiscal year.
- Monitor compliance with the $525,000,000 minimum intercompany promissory note balance.
- Assess the impact of the hurricane-related EBITDA add-back on future financial reporting.