Calumet, Inc. /DE (NASDAQ:CLMT), a Delaware-incorporated entity engaged in petroleum refining with a market capitalization of $1.57 billion, announced today that it has entered into a significant financial transaction. According to InvestingPro analysis, the company currently trades slightly above its Fair Value, while operating with a significant debt burden.
For comprehensive analysis of Calumet’s financial position and 10+ additional expert insights, investors can access the detailed Pro Research Report on InvestingPro. The company, through its subsidiaries Calumet Specialty Products (NASDAQ:) Partners, L.P. and Calumet Finance Corp., has issued $100 million in senior notes with a 9.75% interest rate, set to mature on July 15, 2028.
The private placement, conducted under Rule 144A and Regulation S of the Securities Act of 1933, saw the notes issued at 98% of their par value. This resulted in net proceeds of approximately $96.2 million after accounting for the initial purchasers’ discount and estimated offering expenses. This transaction adds to Calumet’s existing total debt of $2.18 billion, with InvestingPro data showing a concerning current ratio of 0.63, indicating that short-term obligations exceed liquid assets.
The firm has expressed its intention to use the net proceeds to redeem part of its outstanding 11.00% Senior Notes due in 2026 before April 15, 2025. However, the company clarified that this statement does not serve as a redemption notice for the 2026 Notes.
Until the funds are utilized for the intended redemption, Calumet may invest the proceeds in short-term, interest-bearing instruments or other investment-grade securities, or it may temporarily reduce borrowings under its revolving credit facility.
The newly issued notes will be governed by an indenture dated January 16, 2025, with Wilmington Trust, National Association serving as trustee. Interest on the notes will be payable semi-annually, with the first payment due on July 15, 2025. The notes have the backing of the company as well as certain subsidiaries as senior unsecured guarantees.
Calumet has also reserved the right to redeem these notes at specified prices plus accrued interest, starting from 104.875% in 2025 and decreasing to 100% in 2027 and thereafter. Additionally, the company may redeem up to 35% of the aggregate principal amount of the notes with equity offering proceeds at a 109.750% redemption price, subject to conditions.
The indenture includes covenants that impose restrictions on the company’s financial activities, such as incurring additional debt, securing indebtedness with liens, and paying dividends, among others. These restrictions are subject to certain conditions and will be suspended if the notes obtain an investment-grade rating and no default events are occurring.
In the event of a change of control, note holders will have the right to demand the repurchase of their notes at 101% of the principal amount plus accrued interest.
The information provided in this article is based on a press release statement and the full text of the indenture, which is filed with the SEC and incorporated by reference. For investors seeking deeper insights into Calumet’s debt management and overall financial health, InvestingPro offers comprehensive financial analysis, including detailed debt metrics, profitability forecasts, and expert recommendations through its Pro Research Report, available for over 1,400 US stocks.
In other recent news, renewable fuel producer Calumet announced a preliminary fourth-quarter net loss of up to $54 million, partially offset by approximately $20 million in insurance proceeds.
The company also revealed plans to offer $100 million of 9.75% Senior Notes due 2028, intending to use the net proceeds to redeem a portion of its outstanding 11.00% Senior Notes due 2026. Analysts from H.C. Wainwright and TD Cowen maintained a Buy rating on Calumet shares, citing a stronger balance sheet due to the closure of a $1.44 billion Department of Energy loan and potential margin enhancements.
In addition, Calumet expects to report an Adjusted EBITDA between $45 million and $60 million for the fourth quarter of 2024. These recent developments mark significant financial shifts for the company.
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