Quarterly report pursuant to Section 13 or 15(d)

Note 7 - Debt

v3.23.3
Note 7 - Debt
9 Months Ended
Sep. 30, 2023
Notes to Financial Statements  
Debt Disclosure [Text Block]

7. DEBT 

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

   

September 30,

   

December 31,

 
   

2023

   

2022

 

Senior Credit Facilities:

               

Revolving facility

  $     $ 55  

Amounts outstanding under A/R programs

    101       166  

Senior notes

    1,454       1,455  

Variable interest entities

    28       35  

Other

    23       26  

Total debt

  $ 1,606     $ 1,737  

Current portion of debt

  $ 113     $ 66  

Long-term portion of debt

    1,493       1,671  

Total debt

  $ 1,606     $ 1,737  

Direct and Subsidiary Debt

Substantially all of our 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 sheets as a reduction to the face amount of that debt liability. As of  September 30, 2023 and December 31, 2022, the amount of debt issuance costs directly reducing the debt liability was $7 million and $8 million, respectively. We amortize debt issuance costs using either a straight line or effective interest method, depending on the debt agreement, and record them as interest expense.

Revolving Credit Facility

 

On May 20, 2022, Huntsman International entered into a new $1.2 billion senior unsecured revolving credit facility (the “2022 Revolving Credit Facility”). Borrowings will bear interest at the rates specified in the credit agreement governing the 2022 Revolving Credit Facility, which will vary based on the type of loan and Huntsman International’s debt ratings. Under the credit agreement, the interest rate margin and the commitment fee rates are also subject to adjustments based on the Company’s performance on specified sustainability target thresholds with respect to annual percentage reduction in operational greenhouse gas emissions intensity and annual percentage reduction in water consumption intensity. Unless previously terminated in accordance with its terms, the credit agreement will mature in May 2027. Huntsman International may increase the 2022 Revolving Credit Facility commitments up to an additional $500 million, subject to the satisfaction of certain conditions. 

The following table presents certain amounts under our 2022 Revolving Credit Facility as of  September 30, 2023 (monetary amounts in millions):

                     

Unamortized

                         
                     

discounts and

                         
   

Committed

   

Principal

     

debt issuance

     

Carrying

               

Facility

 

amount

   

outstanding

     

costs

     

value

     

Interest rate(2)

 

Maturity

 

2022 Revolving Credit Facility

  $ 1,200     $  

(1)

  $  

(1)

  $  

(1)

 

Term Secured Overnight Financing Rate (“SOFR”) plus 1.525%

    May 2027  

 


(1)

On September 30, 2023, we had an additional $12 million (U.S. dollar equivalents) of letters of credit and bank guarantees issued and outstanding under our 2022 Revolving Credit Facility.

(2)

Interest rates on borrowings under the 2022 Revolving Credit Facility vary based on the type of loan and Huntsman International’s debt ratings. The representative interest rate for U.S. dollar borrowings as of September 30, 2023 was 1.525% above Term SOFR.

 

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.

 

Information regarding our A/R Programs as of September 30, 2023 was as follows (monetary amounts in millions):

       

Maximum funding

   

Amount

     

Facility

 

Maturity

 

availability(1)

   

outstanding

   

Interest rate(2)

U.S. A/R Program

 

July 2024

  $ 150     $ 38  

(3)

Applicable rate plus 0.90%

EU A/R Program

 

July 2024

  100     60    

Applicable rate plus 1.30%

        (or approximately $105)     (or approximately $63)      

 


(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 Term SOFR. The applicable rate for our EU A/R Program is either Term SOFR, EURIBOR or SONIA (Sterling Overnight Interbank Average Rate). 

(3)

As of September 30, 2023, we had approximately $6 million (U.S. dollar equivalents) of letters of credit issued and outstanding under our U.S. A/R Program.

As of September 30, 2023 and December 31, 2022, $282 million and $272 million, respectively, of accounts receivable were pledged as collateral under our A/R Programs.

 

Senior Notes

 

Our senior notes consisted of the following (monetary amounts in millions): 

 

                   

Unamortized

 
                   

premiums,

 
                   

discounts

 
                   

and debt

 

Notes

 

Maturity

 

Interest rate

   

Amount outstanding

 

issuance costs

 

2025 Senior Notes

 

April 2025

    4.25 %  

€300 (€300 carrying value ($316))

  $  

2029 Senior Notes

 

February 2029

    4.50 %  

$750 ($741 carrying value)

    9  

2031 Senior Notes

 

June 2031

    2.95 %  

$400 ($397 carrying value)

    3  

 

Variable Interest Entity Debt

 

 As of  September 30, 2023, AAC, our consolidated 50%-owned joint venture, had $28 million outstanding under its loan commitments and debt financing arrangements. As of September 30, 2023, we have $9 million classified as current debt and $19 million as long-term debt on our condensed consolidated balance sheets. We do not guarantee these loan commitments, and AAC is not a guarantor of any of our other debt obligations.

 

Compliance with Covenants

We believe that we are in compliance with the covenants contained in the agreements governing our material debt instruments, including our 2022 Revolving Credit Facility, our A/R Programs and our senior notes.​