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
July 12, 2010 (July 12, 2010)
Date of Report (Date of earliest event reported)
CALUMET SPECIALTY PRODUCTS PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
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| Delaware
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000-51734
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35-1516132 |
| (State or other jurisdiction
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(Commission File Number)
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(IRS Employer |
| of incorporation)
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Identification No.) |
2780 Waterfront Pkwy E. Drive
Suite 200
Indianapolis, Indiana 46214
(Address of principal executive offices) (Zip Code)
(317) 328-5660
(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:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On July 12, 2010, Calumet Specialty Products Partners, L.P. (the “Company”) provided
preliminary results for the three months ended June 30, 2010. The Company increased its second
quarter throughput rates as compared to those in the first quarter in order to meet increasing
specialty products demand and historically higher demand for fuel products during the second
quarter. For the three months ended June 30, 2010, the Company currently estimates its revenue to
be between $511.0 million and $516.0 million and its Adjusted EBITDA to be between $27.0 million
and $30.0 million. Adjusted EBITDA differs from net income due to the Company’s preliminary
estimates of depreciation and amortization of $15.2 million and interest expense of $7.3 million
but excluding the impact of unrealized hedging activities and adjustments for taxes and various
accrual accounting items, which are unquantifiable at this time. These estimates represent the
most current information available to management. As of the date of this report, such estimates
have not been subject to the Company’s normal quarterly financial statement closing and interim
condensed financial statement preparation processes. As a result, the Company’s actual financial
results could be different from these estimates, and those differences could be material. Neither
the Company’s independent auditors, nor any other independent accountants, have compiled, examined
or performed any procedures with respect to the estimated financial information contained herein,
nor have they expressed any opinion or any other form of assurance on such information, and assume
no responsibility for, and disclaim any association with, such estimated financial information.
References in this report to “the Company,” “we,” “our” or like terms refer to Calumet
Specialty Products Partners, L.P. and its subsidiaries collectively.
In accordance with General Instruction B.2 of Form 8-K, the information contained in Item 2.02
of this report shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section, nor shall such information be
deemed incorporated by reference into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.
Item 8.01 Other Events
(a) On July 12, 2010, the Company issued a press release announcing that it and Calumet
Finance Corp., a wholly owned subsidiary of the Company, intend to offer for sale in a private
placement under Rule 144A to eligible purchasers $450 million in aggregate principal
amount of senior unsecured notes. A copy of the press release is included herewith as Exhibit
99.1.
(b) In connection with its offering of senior unsecured notes, the Company is providing the
following supplemental information, which is contained in the offering materials.
The cancellation of our term loan facility following the issuance of the notes may result in a
termination of one of our derivative contracts, which may require us to make termination payments
to the counterparty, post additional collateral, lose certain derivative positions and/or enter
into replacement contracts, if available.
Both our profitability and our cash flows are affected by volatility in prevailing crude oil,
gasoline, diesel, jet fuel and natural gas prices. We enter into financial derivatives designed to
mitigate the impact of commodity price fluctuations on our business. The primary purpose of our
commodity risk management activities is to economically hedge our cash flow exposure to commodity
price risk so that
we can meet our cash distribution, debt service and capital expenditure requirements despite
fluctuations in crude oil and fuel products prices. As of March 31, 2010, the mark to market of
all our derivative positions was an asset of approximately $5.5 million, with an aggregate of
approximately 13 million barrels of fuel products crack spread hedges. Management estimates that
these amounts as of June 30, 2010 were a liability of approximately $10 million and approximately
13 million barrels, respectively.
As a result of the repayment and termination of our existing term loan at the closing of this
offering and the related termination of the liens thereunder, the counterparty to one of our master
derivative contracts will have the right to terminate such contract. The counterparty to such
contract, which is an affiliate of an initial purchaser, may require us to make certain termination
payments, the amount of which is calculated by such counterparty. We estimate the payments may be
between approximately $3.0 million and $5.0 million, using an estimate of current mark to market
values, but the amount of such payments could be materially more. If this contract is terminated,
we may not be able to enter into replacement derivative contracts on the same or more favorable
terms. Even if the counterparty does not terminate the contract, we may be required by such
counterparty to post additional collateral and/or pay other fees and payments. We expect to fund
any such payments and fees with borrowings under our new revolving credit facility or with cash
flows from operations to the extent available. Our payment of termination fees, posting of
additional collateral, loss of our hedge positions or replacement of the current contract could
have a material adverse effect on our liquidity and financial condition and our ability to make
payments on the notes and our other debt obligations.