UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
Report (Date of earliest event reported): August 12, 2010
Chemtura
Corporation
(Exact
name of registrant as specified in its charter)
Delaware
(State
or other jurisdiction
of
incorporation)
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1-15339
(Commission
file number)
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52-2183153
(IRS
employer identification
number)
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1818
Market Street, Suite 3700, Philadelphia, Pennsylvania
199
Benson Road, Middlebury, Connecticut
(Address
of principal executive offices)
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19103
06749
(Zip
Code)
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(203)
573-2000
(Registrant's
telephone number, including area code)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item
1.01 Entry into a Material Definitive Agreement.
On July 30, 2010, Chemtura Corporation
(“Chemtura” or the “Company”) filed a motion with the Bankruptcy Court seeking,
among other things, approval to enter into documentation with lenders regarding
financing facilities that will fund its emergence from Chapter 11 (the “Exit
Financing Facilities”). The Exit Financing Facilities documentation
comprised, among other things (i) a commitment letter for a $275 million senior
asset-based revolving credit facility (the “Senior Asset-Based Facility”); (ii)
an engagement letter to arrange for Chemtura a senior term loan facility (the
“Term Loan Facility”) and a purchase agreement for an offering of senior notes
of Chemtura (the “Senior Notes”), in the combined principal amount for both the
Term Loan Facility and the Senior Notes of $750 million; and (iii) Amendment No.
2 to the Amended and Restated DIP Credit Agreement (the “A&R DIP Credit
Agreement” or “A&R DIP Credit Facility”). On August 9, 2010, the
Bankruptcy Court approved the Exit Financing Facilities and Amendment No. 2 to
the A&R DIP Credit Agreement. On August 11, 2010, Chemtura
entered into the commitment letter and engagement letter with Bank of America,
N.A., Banc of America Securities LLC, Wells Fargo Capital Finance, LLC, Wells
Fargo Securities, LLC, Citigroup Global Markets Inc., Barclays Bank PLC,
Barclays Capital, the investment banking division of Barclays Bank, and Goldman
Sachs Lending Partners LLC (collectively, the “Exit Financing Sources”) for the
Senior Asset-Based Facility and Term Loan Facility. On that same
date, Chemtura also entered into Amendment No. 2 to the A&R DIP Credit
Agreement with Citibank, N.A. and the other lenders party thereto.
Amendment
No. 2 to the A&R DIP Credit Agreement
Amendment No. 2 to the A&R Credit
Agreement permits the Debtors to enter into the Exit Financing Facilities
documentation described above and consummate the transactions contemplated
therein, including paying related fees and expenses. Amendment No. 2
also permits the Debtors to launch the Senior Notes offering and have the
proceeds of the Senior Notes, together with the proceeds from the Term Loan
Facility, funded into escrow before confirmation of a plan of reorganization
(the “Plan”). The Plan confirmation hearing is scheduled to begin on
September 16, 2010.
Senior
Asset-Based Facility
Under the Senior Asset-Based Facility,
subject to the conditions set forth in the commitment letter, the lenders are
expected to provide a five-year revolving facility in the amount of $275 million
(the “Facility Amount”), subject to availability under a borrowing base (with a
$125 million letter of credit sub-facility). The Senior Asset-Based
Facility is anticipated to have capacity for Chemtura to increase the Facility
Amount to $400 million. The revolving loans under the Senior
Asset-Based Facility will be denominated in U.S. dollars and will bear interest
at a rate per annum which, at Chemtura’s option, can be either: (a) a base rate
(the highest of (i) Bank of America, N.A.’s “prime rate,” (ii) the Federal Funds
Effective Rate plus 1/2 of 1% and (iii) the one-month LIBO Rate plus 1.00%) plus
a margin of between 2.25% and 1.75% based on the average excess availability
under the Senior Asset-Based Facility for the preceding fiscal quarter; or (b)
the current reserve adjusted LIBO rate plus a margin of between 3.25% and 2.75%
based on the average excess availability under the Senior Asset-Based Facility
for the preceding fiscal quarter.
Chemtura’s obligations under the Senior
Asset-Based Facility will be secured by a first priority lien on substantially
all existing and future inventory and accounts receivable, and certain assets
relating to such inventory and accounts receivable, and deposit
accounts, of Chemtura and the other guarantors of the Senior Asset-Based
Facility, subject to certain exceptions to be set forth in the definitive
documentation for the Senior Asset-Based Facility (the “Senior Asset-Based
Collateral”), and a second priority lien on the Term Loan Facility Collateral
(defined below). The Exit Financing Sources will receive customary
fees in respect of the Senior Asset-Based Facility.
The proceeds of the revolving loans
under the Senior Asset-Based Facility will be used to refinance in part
Chemtura’s existing $450 million A&R DIP Credit Facility and for working
capital and general corporate purposes and activities. A definitive
agreement with respect to the Senior Asset-Based Facility is expected to be
entered into at the time the Plan is confirmed by the Bankruptcy Court and
certain other conditions are satisfied.
2
Term
Loan Facility
Under the Term Loan Facility, subject
to the conditions set forth in the engagement letter, the lenders are expected
to provide for borrowings in an aggregate principal amount of $300
million. The Term Loan Facility is anticipated to be a six year
facility and bear interest at a rate per annum which, at Chemtura’s option, can
be either: (a) a base rate (the highest of (i) Bank of America, N.A.’s “prime
rate,” (ii) the Federal Funds Effective Rate plus 1/2 of 1% and (iii) the
one-month LIBO Rate plus 1.00%) plus an applicable margin; or (b) the current
reserve adjusted LIBO rate plus an applicable margin. Chemtura’s
obligations under the Term Loan Facility will be secured by a first priority
lien on substantially all existing and future tangible and intangible assets of
Chemtura and the other guarantors of the Term Loan Facility not constituting
Senior Asset-Based Collateral, including, among other things, equipment, real
property and capital stock of certain direct subsidiaries of Chemtura and the
other guarantors of the Term Loan Facility, subject to certain exceptions to be
set forth in the definitive documentation for the Term Loan Facility (the “Term
Loan Facility Collateral”), and a second priority lien on the Senior Asset-Based
Collateral. The Exit Financing Sources will receive customary fees in
respect of the Term Loan Facility.
If a definitive agreement is entered
into with respect to the Term Loan Facility, the net proceeds will be deposited
into an escrow account until the Plan is confirmed by the Bankruptcy Court and
certain other conditions are satisfied. The net proceeds under the
Term Loan Facility, upon such release from the escrow account, will be used to
refinance Chemtura’s existing $450 million A&R DIP Credit Facility and to
fund Chemtura’s emergence from Chapter 11 as provided in the Plan.
Item
8.01 Other Events
Lindane is a pesticide that was first
registered in Canada in 1938. Chemtura’s predecessor companies developed
and registered in Canada lindane-based products. In 2005, Chemtura
commenced an arbitration against the Government of Canada pursuant to Article 3
of the United Nations Commission on International Trade Law Arbitration Rules
for alleged violations of the North American Free Trade Agreement (“NAFTA”)
relating to Chemtura’s lindane registrations in Canada. Chemtura
sought approximately $78 million in damages including interest. On August
2, 2010, the arbitration tribunal issued a decision denying the relief requested
by Chemtura and awarding the Government of Canada $3 million in costs and
attorneys’ fees.
Forward
Looking Statements
This report includes forward-looking
statements. These forward-looking statements are identified by terms and
phrases such as “anticipate,” “believe,” “intend,” “estimate,” “expect,”
“continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will” and
similar expressions and include references to assumptions and relate to our
future prospects, developments and business strategies. Important
factors that could cause actual results to differ materially from those in the
forward-looking statements include the following:
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the
ability to complete a restructuring of our balance sheet including the
entry into definitive agreements for the term loan facility and senior
asset based facility and satisfaction of any conditions precedent to
funding set forth therein;
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•
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the
ability to have the Bankruptcy Court approve motions required to sustain
operations during the Chapter 11
cases;
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the
uncertainties of the Chapter 11 cases, including the potential adverse
impact on our operations, management, employees and the response of our
customers;
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our
estimates of the cost to settle proofs of claim presented in the Chapter
11 cases;
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the
ability to confirm and consummate the plan of reorganization filed by the
Company;
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the
ability to be compliant with our debt covenants or obtain necessary
waivers and amendments;
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the
ability to reduce our indebtedness
levels;
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the
cyclical nature of the global chemicals industry and impact of general
economic conditions;
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significant
international operations and
interests;
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3
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the
ability to obtain increases in selling prices to offset increases in raw
material and energy costs;
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the
ability to retain sales volumes in the event of increasing selling
prices;
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the
ability to absorb fixed cost overhead in the event of lower
volumes;
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underfunded
pension and other post-retirement benefit plan liabilities and underlying
assumptions;
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the
ability to improve profitability in our Industrial Engineered Products
segment as the general economy recovers from the
recession;
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the
ability to implement the El Dorado, Arkansas restructuring
program;
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the
ability to comply with product registration requirements under European
Union REACh legislation;
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the
ability to obtain growth from demand for petroleum additive, lubricant and
agricultural product applications;
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the
ability to restore profitability in our Chemtura AgroSolutionsTM
segment as demand conditions recover in the agrochemical
market;
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disease
and pest conditions, as well as local, regional, regulatory and economic
conditions, which could adversely affect the profitability of our Chemtura
AgroSolutionsTM
segment;
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the
ability to sell methyl bromide due to regulatory
restrictions;
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changes
in weather conditions which could adversely affect the seasonal selling
cycles in both our Consumer Performance Products and Chemtura
AgroSolutionsTM
segments;
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changes
in the availability and/or quality of our energy and raw
materials;
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the
ability to collect our outstanding
receivables;
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changes
in interest rates and foreign currency exchange
rates;
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changes
in technology, market demand and customer
requirements;
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the
enactment of more stringent U.S. and international environmental laws and
regulations;
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the
ability to realize expected cost savings under our restructuring plans,
and lean manufacturing initiatives;
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the
ability to recover our deferred tax
assets;
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the
ability to support the goodwill and long-lived assets related to our
businesses; and
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other
factors described under “Risk Factors” in our periodic
reports.
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These
statements are based on our estimates and assumptions and on currently available
information. The forward-looking statements include information
concerning our possible or assumed future outcomes, and actual outcomes may
differ significantly from those discussed. Forward-looking
information is intended to reflect opinions as of the date this report was
filed. We undertake no duty to update any forward-looking statements
to conform the statements to actual outcomes.
4
Signatures
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Chemtura
Corporation
(Registrant)
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By: /s/ Robert J.
Cicero
Name: Robert
J. Cicero
Title: Assistant
Secretary
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Date:
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August
12, 2010
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