Calumet Announces Pricing of $100 Million Private Placement of 9.75% Senior Notes due 2028

Rhea-AI Summary

Calumet (NASDAQ: CLMT) announced the pricing of a $100 million private placement of 9.75% Senior Notes due 2028, to be issued at 98% of par. The offering is expected to close on January 16, 2025. The new notes are a mirror issue to the existing $325 million 9.75% Senior Notes issued in June 2023, though they will be issued under a separate indenture with different CUSIP numbers.

The company plans to use the net proceeds to redeem a portion of its outstanding 11.00% Senior Notes due 2026, with the redemption expected on or before April 15, 2025. The securities will be offered exclusively to qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S, and have not been registered under the Securities Act.

Positive

• Refinancing higher-cost debt (11.00%) with lower-cost notes (9.75%)
• Successfully secured $100 million in new financing

Negative

• Notes being issued at 98% of par value, representing a discount
• Additional debt issuance could increase financial leverage

Insights

Fixed Income Analyst

This debt refinancing operation demonstrates strategic financial management by reducing Calumet's interest expense burden. The new $100 million notes at 9.75% will replace a portion of existing 11% notes due 2026, generating approximately $1.25 million in annual interest savings. The pricing at 98% of par indicates reasonable market acceptance despite challenging macro conditions.

The mirror structure to existing 2028 notes maintains consistent debt architecture while extending maturity profile. This transaction improves the company's weighted average cost of capital and provides additional financial flexibility. The successful private placement under Rule 144A suggests strong institutional investor confidence in Calumet's credit profile and business trajectory.

Corporate Finance Strategist

The refinancing reflects proactive liability management, taking advantage of the current rate environment to optimize the capital structure. Key benefits include:

• Extended debt maturity profile by ~2 years from 2026 to 2028
• Reduced interest burden through 1.25% lower coupon rate
• Enhanced financial flexibility with staggered maturity ladder

While the 2% discount to par represents a modest concession, it's offset by long-term interest savings. The transaction strengthens Calumet's balance sheet without materially increasing leverage, positioning the company well for continued operational execution in specialty chemicals and renewable fuels segments.

INDIANAPOLIS, Jan. 14, 2025 /PRNewswire/ -- Calumet, Inc. (NASDAQ: CLMT) (the "Company" or "Calumet") today announced that its wholly owned subsidiaries, Calumet Specialty Products Partners, L.P. (the "Partnership") and Calumet Finance Corp. (together with the Partnership, the "Issuers"), priced their private placement (the "Offering") under Rule 144A and Regulation S under the Securities Act of 1933, as amended (the "Securities Act"), of $100 million in aggregate principal amount of 9.75% Senior Notes due 2028 (the "New Notes"). The New Notes mature on July 15, 2028 and will be issued at 98% of par. The Offering is expected to close on January 16, 2025, subject to customary closing conditions.

Calumet intends to use all of the net proceeds from the Offering to redeem a portion of the Issuers' outstanding 11.00% Senior Notes due 2026 (the "2026 Notes") on or before April 15, 2025 (the "Redemption"). The New Notes are a mirror issue to the Issuers' existing 9.75% Senior Notes due 2028, of which $325 million in aggregate principal amount was issued on June 27, 2023 (the "Original Notes"). The New Notes will have substantially identical terms as the Original Notes. However, the New Notes will be issued under a separate indenture and have different CUSIP numbers from the Original Notes.

The securities to be sold will not be, and have not been, registered under the Securities Act, or any state securities laws, and unless so registered, the securities may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Calumet plans to offer and sell the securities only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons outside the United States pursuant to Regulation S under the Securities Act.

This press release does not constitute a notice of redemption with respect to the 2026 Notes. This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, any of these securities, nor shall there be any sale of these securities in any state in which such offer, solicitation, or sale would be unlawful. This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act.

About Calumet

Calumet, Inc. (NASDAQ: CLMT) manufactures, formulates and markets a diversified slate of specialty branded products and renewable fuels to customers across a broad range of consumer-facing and industrial markets. Calumet is headquartered in Indianapolis, Indiana and operates twelve facilities throughout North America.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements and information in this press release may constitute "forward-looking statements." The words "will," "may," "intend," "believe," "expect," "outlook," "forecast," "anticipate," "estimate," "continue," "plan," "should," "could," "would," or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. The statements discussed in this press release that are not purely historical data are forward-looking statements, including, but not limited to, the Offering and the use of proceeds therefrom and the Redemption. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While our management considers these assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Accordingly, our actual results may differ materially from the future performance that we have expressed or forecast in our forward-looking statements. For additional information regarding known material risks, uncertainties and other factors that can affect future results, please see our filings with the Securities and Exchange Commission ("SEC"), including the risk factors and other cautionary statements in the latest Annual Report on Form 10-K of the Partnership and other filings with the SEC by the Company and the Partnership. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except to the extent required by applicable law.

View original content:https://www.prnewswire.com/news-releases/calumet-announces-pricing-of-100-million-private-placement-of-9-75-senior-notes-due-2028--302351118.html

SOURCE Calumet, Inc.

FAQ

What is the interest rate difference between CLMT's new notes and the 2026 notes being redeemed?

The new notes carry a 9.75% interest rate, compared to 11.00% for the 2026 notes being redeemed, representing a 1.25% reduction in interest rate.

When will CLMT's new $100 million senior notes mature?

The new notes will mature on July 15, 2028.

What is the issue price of CLMT's new $100 million senior notes?

The new notes will be issued at 98% of par value.

How does CLMT plan to use the proceeds from the new notes offering?

Calumet intends to use all net proceeds to redeem a portion of their outstanding 11.00% Senior Notes due 2026, with redemption planned on or before April 15, 2025.

How much in original 9.75% Senior Notes due 2028 did CLMT previously issue?

Calumet previously issued $325 million in aggregate principal amount of 9.75% Senior Notes due 2028 on June 27, 2023.