Huntsman is soon to receive lender approval for an amendment that will allow the company to issue $375 million in bonds, said Sean Douglas, Huntsman's v.p. and treasurer. Credit Suisse First Boston and Deutsche Bank will lead the bond deal. The proceeds from the bonds will be used to pay off the amortization on the company's $938 million "A" loan over the next couple of years and will then be distributed on a pro rata basis across the outstanding amount on the "A" loan, he explained.
Some of the proceeds will also be used to pay down a portion of the outstanding amount on the company's revolver, but Douglas declined to comment on how much Huntsman has outstanding and the amount of proceeds that will be directed to the revolver. The market for Huntsman's "A" piece jumped to the 917/16 927/8 range from the 885/16 903/16 context where the loan was quoted at the beginning of this month, according to LoanX. Deutsche Bank also holds the lead on the company's credit.
Huntsman was poised to tap the bond market early in the summer, but shelved the issue when the company found the deal uneconomical. "We felt the market has had a good couple of weeks," said Douglas about returning to the capital markets at this time. The original issue was slated to pay down the company's $450 million "B" loan. There is a ratcheting feature attached to the company's term loan "B" that requires Huntsman to pay an additional 50 basis points every quarter until a bond deal is completed or the pricing reaches a pre-set ceiling. There is an additional 2% payment-in-kind feature that has been added to the "B" piece. As of June 30, the "B" loan bore an interest rate of LIBOR plus 71/2% and the "A" loan was priced at LIBOR plus 43/4%.