Huntsman Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

DEBT

DEBT

9 Months Ended

Sep. 30, 2020

DEBT

DEBT

8. DEBT

Outstanding debt, net of debt issuance costs, consisted of the following (dollars in millions):

Huntsman Corporation


	September 30,		December 31,
	2020		2019
Senior Credit Facilities:
Revolving facility	$	—	$	40
Amounts outstanding under A/R programs		52		167
Term loan		—		103
Senior notes		2,003		1,963
Variable interest entities		50		65
Other		19		51
Total debt	$	2,124	$	2,389
Total current portion of debt	$	567	$	212
Long-term portion of debt		1,557		2,177
Total debt	$	2,124	$	2,389

Huntsman International


	September 30,		December 31,
	2020		2019
Senior Credit Facilities:
Revolving facility	$	—	$	40
Amounts outstanding under A/R programs		52		167
Term loan		—		103
Senior notes		2,003		1,963
Variable interest entities		50		65
Other		19		51
Total debt, excluding debt to affiliates	$	2,124	$	2,389
Total current portion of debt	$	567	$	212
Long-term portion of debt		1,557		2,177
Total debt, excluding debt to affiliates		2,124		2,389
Notes payable to affiliates-current		—		100
Notes payable to affiliates-noncurrent		—		280
Total debt	$	2,124	$	2,769

Direct and Subsidiary Debt

Huntsman Corporation’s direct debt and guarantee obligations consist of a guarantee of certain indebtedness incurred from time to time to finance certain insurance premiums. Substantially all of our other debt, including the facilities described below, has been incurred by our subsidiaries (primarily Huntsman International). Huntsman Corporation is not a guarantor of such subsidiary debt.

Certain of our subsidiaries have third-party debt agreements that contain certain restrictions with regard to dividends, distributions, loans or advances. In certain circumstances, the consent of a third party would be required prior to the transfer of any cash or assets from these subsidiaries to us.

Debt Issuance Costs

We record debt issuance costs related to a debt liability on the balance sheet as a reduction to the face amount of that debt liability. For September 30, 2020 and December 31, 2019, the amount of debt issuance costs directly reducing the debt liability was $9 million and $11 million, respectively. We record the amortization of debt issuance costs as interest expense.

Revolving Credit Facility

As of September 30, 2020, our $1.2 billion senior unsecured revolving credit facility (“2018 Revolving Credit Facility”) was as follows (dollars in millions):


						Unamortized
						Discounts and
	Committed		Principal			Debt Issuance			Carrying
Facility	Amount		Outstanding			Costs			Value			Interest Rate(2)	Maturity
2018 Revolving Credit Facility	$	1,200	$	—	(1)	$	—	(1)	$	—	(1)	USD LIBOR plus 1.50%	2023

(1)	On September 30, 2020, we had an additional $6 million (U.S. dollar equivalents) of letters of credit and bank guarantees issued and outstanding under our 2018 Revolving Credit Facility.

(2)	Interest rates on borrowings under the 2018 Revolving Credit Facility vary based on the type of loan and Huntsman International’s debt ratings. The then applicable interest rate as of September 30, 2020 was 1.50% above LIBOR.

Term Loan Credit Facility

On September 24, 2019, Huntsman International entered into a 364-day term loan facility (the “2019 Term Loan”), pursuant to which Huntsman International borrowed an aggregate principal amount of €92 million (or $101

million equivalent). We used the net proceeds from the 2019 Term Loan to finance our acquisition of the 50% noncontrolling interest that we did not own in the Sasol-Huntsman maleic anhydride joint venture. On September 22, 2020, we repaid the 2019 Term Loan in full at maturity.

A/R Programs

Our U.S. accounts receivable securitization program (“U.S. A/R Program”) and our European accounts receivable securitization program (“EU A/R Program” and collectively with the U.S. A/R Program, “A/R Programs”) are structured so that we transfer certain of our trade receivables to the U.S. special purpose entity (“U.S. SPE”) and the European special purpose entity (“EU SPE”) in transactions intended to be true sales or true contributions. The receivables collateralize debt incurred by the U.S. SPE and the EU SPE.

In December 2019, we entered into amendments to our EU A/R program (the “European Amendment”) and our U.S. A/R Program (the “U.S. Amendment”). The European Amendment allowed the removal of pledged obligors related to the Chemical Intermediates Businesses sold to Indorama. The U.S. Amendment allowed the removal of pledged obligors related to the Chemical Intermediates Businesses sold to Indorama as well as reduced the maximum funding capacity from $250 million to $150 million upon completion of the sale on January 3, 2020.

Information regarding our A/R Programs as of September 30, 2020 was as follows (monetary amounts in millions):


		Maximum Funding		Amount
Facility	Maturity	Availability(1)		Outstanding			Interest Rate(2)
U.S. A/R Program	April 2022	$	150	$	—	(3)	Applicable rate plus 0.90%
EU A/R Program	April 2022	€	100	€	45		Applicable rate plus 1.30%
			(or approximately $117)		(or approximately $52)

(1)

The amount of actual availability under our A/R Programs may be lower based on the level of eligible receivables sold, changes in the credit ratings of our customers, customer concentration levels and certain characteristics of the accounts receivable being transferred, as defined in the applicable agreements.

(2)	The applicable rate for our U.S. A/R Program is defined by the lender as USD LIBOR. The applicable rate for our EU A/R Program is either GBP LIBOR, USD LIBOR or EURIBOR.

(3)	As of September 30, 2020, we had approximately $4 million (U.S. dollar equivalents) of letters of credit issued and outstanding under our U.S. A/R Program.

As of September 30, 2020 and December 31, 2019, $207 million and $221 million, respectively, of accounts receivable were pledged as collateral under our A/R Programs.

Notes

On March 13, 2019, Huntsman International completed a $750 million offering of its 4.50% senior notes due 2029 (“2029 Senior Notes”). On March 27, 2019, Huntsman International applied the net proceeds of the offering of the 2029 Senior Notes to redeem in full $650 million in aggregate principal amount of its 4.875% senior notes due 2020 (“2020 Senior Notes”) and also paid associated costs and accrued interest of $21 million and $12 million, respectively. In addition, we recognized a loss on early extinguishment of debt of $23 million in the first quarter of 2019.

The 2029 Senior Notes bear interest at 4.50% per year, payable semi-annually on May 1 and November 1, and will mature on May 1, 2029. Huntsman International may redeem the 2029 Senior Notes in whole or in part at any time prior to February 1, 2029 at a price equal to 100% of the principal amount thereof plus a “make-whole” premium and accrued and unpaid interest. Huntsman International may redeem the 2029 Senior Notes at any time, in whole or from time to time in part, on or after February 1, 2029 at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest.

Note Payable from Huntsman International to Huntsman Corporation

During the first quarter of 2020, our loan of $380 million to our subsidiary Huntsman International was repaid to us in full.

Compliance with Covenants

We believe that we are in compliance with the covenants contained in the agreements governing our material debt instruments, including our 2018 Revolving Credit Facility, our A/R Programs and our notes.