Calumet Provides Update on Recent Financing Activity

Rhea-AI Summary

Calumet (NASDAQ: CLMT) has announced significant financing activities, including a $100 million private placement of 9.75% Senior Notes due 2028 through its subsidiaries and the registration of a $65 million at-the-market (ATM) equity program.

CEO Todd Borgmann described the bond pricing as a targeted refinancing effort. The ATM equity facility, while not expected to be utilized immediately, provides a flexible tool for managing maturities. These financial moves, combined with a recently closed DOE loan and expected free cash flow, create a path to address the company's 2026 notes while focusing on strategic objectives including the MaxSAF project and balance sheet deleveraging.

Positive

• Secured $100 million through Senior Notes private placement
• Established flexible $65 million ATM equity program
• Recently closed DOE loan strengthening financial position
• Clear strategy for addressing 2026 notes maturity

Negative

• High interest rate of 9.75% on new Senior Notes
• Potential shareholder dilution risk from ATM program
• Additional debt burden through new notes offering

Insights

Financial Analyst

The financing update reveals strategic capital management moves with notable implications. The $100 million senior notes at 9.75% interest, combined with a $65 million ATM equity program, demonstrates a calculated approach to address upcoming debt maturities. The 9.75% interest rate, while relatively high, reflects current market conditions and the company's credit profile.

The MaxSAF project funding strategy now appears more robust with multiple financing levers: the new notes, ATM facility, DOE loan and projected free cash flow. This multi-pronged approach provides flexibility in managing the 2026 notes maturity while maintaining strategic focus on the MaxSAF project execution and deleveraging initiatives.

For retail investors: Think of this as setting up multiple backup plans - like having both a savings account and a credit line available. The company isn't planning to use all options but has them ready if needed. The high interest rate on the new notes suggests some financial pressure, but the variety of funding sources helps reduce overall risk.

Debt Market Specialist

The structured approach to refinancing demonstrates sophisticated liability management. The $100 million notes offering provides immediate liquidity while the ATM program creates a strategic equity backstop. The decision to maintain optionality through the ATM facility without immediate issuance signals confidence in cash flow projections while preserving financial flexibility.

The 9.75% coupon rate on the 2028 notes reflects current market pricing for similar-rated industrial issuers. While higher than investment-grade rates, it's within reasonable range given the company's leverage profile and current market conditions. The combination with the DOE loan likely provides better blended costs than attempting larger high-yield issuance.

INDIANAPOLIS, Jan. 15, 2025 /PRNewswire/ -- Calumet, Inc. (NASDAQ: CLMT) (the "Company," "Calumet," "we," "our" or "us") provided an update on its recent financing activity, including the pricing by its wholly owned subsidiaries, Calumet Specialty Products Partners, L.P. (the "Partnership") and Calumet Finance Corp., of their private placement of $100 million in aggregate principal amount of 9.75% Senior Notes due 2028 (the "Notes Offering") and registration its $65 million at-the-market equity program (the "ATM Program").

"Yesterday's successful bond pricing was a targeted piece of refinancing," said Todd Borgmann, CEO.  "In conjunction with the notes offering, Calumet registered a small ATM equity facility.  While we do not envision a need to issue equity, the flexible program provides a controllable, and fully optional, tool to prudently manage maturities. These financings, alongside our recently closed DOE loan and expected free cash flow provide a clear, robust, and flexible path to removing our 2026 notes, allowing us to focus on our strategic objectives of executing the MaxSAF project and deleveraging our balance sheet with a continued focus on shareholder value creation."

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.

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, (i) our expectations regarding the ATM Offering, the Notes Offering and the funding under the U.S. Department of Energy loan facility, including the timing and intended use of proceeds therefrom, (ii) our expectation regarding our business outlook and cash flows, including with respect to the Montana Renewables business and our plans to de-leverage our balance sheet, and (iii) our ability to meet our financial commitments, debt service obligations, debt instrument covenants, contingencies and anticipated capital expenditure. 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-provides-update-on-recent-financing-activity-302351880.html

SOURCE Calumet, Inc.

FAQ

What is the interest rate and amount of Calumet's (CLMT) new Senior Notes offering?

Calumet's new Senior Notes offering is for $100 million with a 9.75% interest rate, due in 2028.

How much is Calumet's (CLMT) new ATM equity program worth?

Calumet has registered a $65 million at-the-market (ATM) equity program.

What is the purpose of Calumet's (CLMT) January 2025 financing activities?

The financing activities aim to provide a path to remove 2026 notes, support the MaxSAF project execution, and continue balance sheet deleveraging.

Will Calumet (CLMT) immediately use its new ATM equity program?

According to CEO Todd Borgmann, the company does not envision an immediate need to issue equity through the ATM program.