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): April 29, 2009
Chemtura
Corporation
(Exact
name of registrant as specified in its charter)
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Delaware
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1-15339
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52-2183153
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(State
or other jurisdiction
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(Commission
file number)
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(IRS
employer identification
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of
incorporation)
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number)
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199
Benson Road, Middlebury, Connecticut
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06749
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(Address
of principal executive offices)
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(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):
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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))
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Item
1.01. Entry into a Material Definitive Agreement.
As
previously disclosed on Current Report on Form 8-K filed March 23, 2009,
Chemtura Corporation (the “Company”) and certain of its subsidiaries organized
in the United States (collectively, the “Debtors”) on March 18, 2009 filed
voluntary petitions in the United States Bankruptcy Court for the Southern
District of New York (the “Bankruptcy Court”) and filed a motion seeking
approval of a Senior Secured Super-Priority-Debtor-in Possession Credit
Agreement (the “DIP Credit Agreement”), which was approved on
an interim basis by the Bankruptcy Court on March 20,
2009.
On April
29, 2009, the Company, certain of its subsidiaries that are guarantors under the
DIP Credit Agreement, the banks, financial institutions and other institutional
lenders party to the DIP Credit Agreement (the “Lenders”), and Citibank, N.A.,
as administrative agent for the Lenders, entered into Amendment No. 1 to the DIP
Credit Agreement.
Pursuant
to such Amendment No. 1, the DIP Credit Agreement was amended to
(i) increase the outstanding amount of intercompany loans the Debtors could
make to the non-debtor foreign subsidiaries of the Company from $7.5 million to
$40 million; (ii) reduce the required level of borrowing availability under the
minimum availability covenant; and (iii) eliminate the requirement to pay
additional interest expense if a specified level of accounts receivable
financing was not available to the Company’s European subsidiaries.
On the
same date, the Bankruptcy Court granted final approval of the DIP Credit
Agreement, as amended pursuant to Amendment No. 1 thereto.
The DIP
Credit Agreement matures on the earlier of 364 days, the effective date of a
reorganization plan or the date of termination in whole of the Commitments (as
defined in the DIP Credit Agreement).
The DIP
Credit Agreement is comprised of the following: (i) $250.0 million of
non-amortizing term loans, (ii) an approximately $63.5 million revolving credit
facility and (iii) an approximately $86.5 million revolving credit facility
representing the “roll-up” of certain outstanding secured amounts owed to
lenders under the existing prepetition senior credit facility who have
commitments under the DIP Credit Agreement. In addition, a letter of
credit subfacility for letters of credit in an aggregate amount of $50 million
is available under the unused commitments of the revolving credit
facilities.
The
obligations of Company as borrower under the DIP Credit Agreement are guaranteed
by the Company’s other U.S. subsidiaries who are Debtors in the Chapter 11
cases, which own substantially all of the Company’s U.S. assets. The
obligations must also be guaranteed by each of the Company’s subsidiaries that
becomes party to a chapter 11 case, subject to certain specified
exceptions.
All
amounts owing by the Company and the guarantors under the DIP Credit Agreement
and certain hedging arrangements and cash management services are secured,
subject to a carve-out as set forth in the DIP Credit Agreement (the
“Carve-Out”) for professional fees and expenses (as well as other fees and
expenses customarily subject to such Carve-Out), by (i) a first priority
perfected pledge of (x) all notes owned by the Company and the guarantors and
(y) all capital stock owned by the Company and the guarantors (subject to
certain exceptions relating to their respective foreign subsidiaries) and (ii) a
first priority perfected security interest in all other assets owned by the
Company and the guarantors, in each case, junior only to liens as set forth in
the DIP Credit Agreement and the Carve-Out.
Availability
of credit under the DIP Credit Agreement is equal to (i) the lesser of (a) the
Borrowing Base (as defined below) and (b) the effective commitments under the
DIP Credit Agreement minus (ii) the aggregate amount of advances under the DIP
Credit Agreement and any undrawn or unreimbursed letters of
credit. “Borrowing Base” is the sum of (i) 80% of the Debtors’
eligible accounts receivable, plus (ii) the lesser of (a) 85% of the net orderly
liquidation value percentage (as defined in the DIP Credit Agreement) of the
Debtors’ eligible inventory and (b) 75% of the cost of the Debtors’ eligible
inventory, plus (iii) $125 million, less certain reserves.
Borrowings
under the term loans and the approximately $63.5 million revolving facility bear
interest at a rate per annum equal to, at Company’s election, (i)
6.5% plus the Base Rate (as defined in the DIP Credit Agreement) or (ii) 7.5%
plus the Eurodollar Rate (as defined in the DIP Agreement). Borrowings
under the approximately $86.5 million revolving facility bear interest at a rate
per annum equal to, at Company’s election, (i) 2.5% plus the Base
Rate or (ii) 3.5% plus the Eurodollar Rate. Additionally, the Company
will pay a unused commitment fee of 1.5% per annum on the average daily unused
portion of the revolving facilities and a letter of credit fee on the average
daily balance of the maximum daily amount available to be drawn under letters of
credit equal to the applicable margin above the Eurodollar Rate applicable for
borrowings under the applicable revolving facility.
The DIP
Credit Agreement requires the Debtors to meet the following financial
covenants: (a) minimum cumulative monthly earnings before
interest, taxes, and depreciation (“EBITDA”), after certain adjustments, on a
consolidated basis; (b) a maximum variance of the weekly cumulative cash flows
of the Debtors, compared to an agreed upon forecast; (c) minimum borrowing
availability of $25 million until June 30, 2009, and $30 million thereafter; and
(d) maximum quarterly capital expenditures. In addition, the
DIP Credit Agreement contains covenants which, among other things, limit the
incurrence of additional debt, operating leases, issuance of capital stock,
issuance of guarantees, liens, investments, disposition of assets, dividends,
certain payments, mergers, change of business, transactions with affiliates,
prepayments of debt, repurchases of stock and redemptions of certain other
indebtedness and other matters customarily restricted in such
agreements.
The DIP
Credit Agreement contains events of default, including, among others, payment
defaults, breaches of representations and warranties, and covenant
defaults.
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.
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Chemtura
Corporation
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(Registrant)
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By:
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/s/
Billie
S. Flaherty |
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Name:
Billie
S. Flaherty |
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Title:
Secretary |