Huntsman's bank loan ticked up about two points right under par with the buzz that the company would issue bonds that would ultimately pay down its bank debt. The paper was quoted in the 991/2-100 context last week. Market players were divided on whether or not the rumor was real and concrete details of the issue could not be determined. One trader also noted that the numbers for the most recent quarter were positive and showed improvement. Huntsman reported that adjusted EBITDA increased to $58.2 million in the fourth quarter of 2003 compared to $31.8 million during the same period last year.
There is a ratcheting feature attached to Huntsman's term loan "B" that originally required the company to pay an additional 50 basis points of interest every quarter until a bond deal is completed up until Jan. 1. On April 1 and July 1, however, the margin increase is an additional 75 basis points up to a maximum of 93/4%. The pricing should have increased to 9% this quarter. Huntsman first approached the market looking for a bond deal that would allow the company to pay down a portion of the "B" loan last summer. The company ultimately pulled the deal, which was set to be brought by Deutsche Bank, after it found the market uncompetitive (LMW, 6/2).
Huntsman later returned to the bond market in September with a $380 million offering via Credit Suisse First Boston and Deutsche Bank. The proceeds of that deal were not directed toward the "B" loan, but were used to repay $65 million of Huntsman's $275 million revolver and $296.6 million on the "A" piece, including the prepayment of $130 million of scheduled amortization payments. In December, the company sold another $75.4 million in senior notes and directed the proceeds once again toward the revolver and "A" loan. Huntsman still had $459 million outstanding on its "B" loan at the end of last year. Calls to Sean Douglas, v.p. and treasurer of Huntsman, were not returned by press time.