Texas Petrochemicals has turned to Deutsche Bank, Credit Suisse and LaSalle/ABN AMRO to provide financing to back its $296 million acquisition of the assets of the U.S. butadiene and related methyl tertiary butyl ether (MTBE) operations of Huntsman Corp., which includes a plant in Port Neches, Texas. The financing consists of a $115 million asset-based revolver and a $280 million term loan that is covenant lite. Pricing is in the LIBOR plus 2 1/4%-2 1/2% range on the term loan and LIBOR plus 1 1/2% on the revolver. Standard & Poor's assigned a B+ to the term loan and Moody's Investors Service assigned a Ba3. Neither ratings agency rated the revolver.
McCall Keyser, v.p., finance and treasurer, said Texas Petrochemicals, which has more than $1 billion in annual sales, bought the assets because the Port Neches plant operations are very similar to its own plant in Houston. "It's a natural fit," he said. "Their main business is processing crude C4 into butadiene and that is what we do. It's a wonderful coincidence; the plants are almost built identical. The layout of the plants makes it very easy to execute the acquisition."
He would not comment on whom initiated the transaction. The result is a combined company that will have $1.7 billion in revenues on a pro forma basis, based on 2005 results. Keyser said Petrochemicals is optimistic the deal will be closed by the end of the quarter. There will be no major changes in terms of management; but the company will look at operational efficiencies.
The choice of banks was based on past relationships. Calls to officials at Huntsman were not returned.