Quarterly report pursuant to Section 13 or 15(d)

Note 8 - Debt

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Note 8 - Debt
9 Months Ended
Sep. 30, 2024
Notes to Financial Statements  
Debt Disclosure [Text Block]

8. DEBT 

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

   

September 30,

   

December 31,

 
   

2024

   

2023

 

Senior credit facilities:

               

Revolving facility

  $     $  

Senior notes

    1,820       1,471  

Amounts outstanding under A/R programs

          169  

Variable interest entities

    19       26  

Other

    20       22  

Total debt

  $ 1,859     $ 1,688  

Current portion of debt

  $ 346     $ 12  

Long-term portion of debt

    1,513       1,676  

Total debt

  $ 1,859     $ 1,688  

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.

Revolving Credit Facility

 

On May 20, 2022, Huntsman International entered into a $1.2 billion senior unsecured revolving credit facility (the “2022 Revolving Credit Facility”). Borrowings bear interest at the rates specified in the 2022 Revolving Credit Facility, which vary based on the type of loan and Huntsman International’s debt ratings. Under the 2022 Revolving Credit Facility, 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 2022 Revolving Credit Facility 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, 2024 (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)

  $     $  

Term Secured Overnight Financing Rate (“SOFR”) plus 1.475%

 

May 2027

 


(1)

On September 30, 2024, we had an additional $6 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, 2024 was 1.475% above Term SOFR.

   

Senior Notes

 

On September 26, 2024, Huntsman International completed a $350 million offering of its 2034 Senior Notes. Huntsman International used the net proceeds from the offering for general corporate purposes, including repayment of debt. The 2034 Senior Notes bear interest at 5.70% per year, payable semi-annually on April 15 and October 15 of each year, and will mature on October 15, 2034. Huntsman International may redeem the 2034 Senior Notes in whole or in part at any time prior to July 15, 2034 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 2034 Senior Notes in whole or in part at any time on or after July 15, 2034 at a price equal to 100% of the principal amount thereof plus accrued and unpaid interest.

 

As of September 30, 2024, 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 ($334))

  $  

2029 Senior notes

 

February 2029

    4.50 %  

$750 ($743 carrying value)

    7  

2031 Senior notes

 

June 2031

    2.95 %  

$400 ($398 carrying value)

    2  

2034 Senior notes

 

October 2034

    5.70 %  

$350 ($345 carrying value)

    5  

 

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.

 

On January 22, 2024, we entered into an amendment to our U.S. A/R Program that extended the scheduled maturity date of our U.S. A/R Program from July 2024 to January 2027. In addition, on January 31, 2024, we entered into an amendment to our EU A/R Program, effective as of February 15, 2024, that extended the scheduled maturity date of our EU A/R Program from July 2024 to July 2027. Aside from the extended maturity dates, these amendments to our A/R Programs secured substantially similar terms as those in the prior agreements.

 

Information regarding our A/R Programs as of September 30, 2024 was as follows (monetary amounts in millions):

       

Maximum funding

   

Amount

     

Facility

 

Maturity

 

availability(1)

   

outstanding

   

Interest rate(2)

U.S. A/R Program

 

January 2027

  $ 150     $  

(3)

Applicable rate plus 0.95%

EU A/R Program

 

July 2027

  100        

Applicable rate plus 1.45%

        (or approximately $112)            

 


(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, 2024, we had approximately $6 million (U.S. dollar equivalent) of letters of credit issued and outstanding under our U.S. A/R Program.

As of September 30, 2024 and December 31, 2023, $278 million and $224 million, respectively, of accounts receivable were pledged as collateral under our A/R Programs.

 

Variable Interest Entity Debt

 

 As of  September 30, 2024, AAC, our consolidated 50%-owned joint venture, had $19 million outstanding under its loan commitments and debt financing arrangements. As of September 30, 2024, we have $9 million classified as current debt and $10 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.

 

Note Payable

 

During the second quarter of 2024, HPS repaid the remainder of its outstanding note payable to SLIC denominated in Chinese renminbi, the equivalent of $190 million, related to the separation and acquisition of assets of SLIC. For more information, see “Note 3. Business Combinations and Acquisitions—Separation and Acquisition of Assets of SLIC Joint Venture.”

 

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, 2024 and December 31, 2023, the amount of debt issuance costs directly reducing the debt liability was $9 million and $7 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.​

 

Compliance with Covenants

Our 2022 Revolving Credit Facility contains a financial covenant regarding the leverage ratio of Huntsman International and its subsidiaries. The 2022 Revolving Credit Facility also contains other customary covenants and events of default for credit facilities of this type. Upon an event of default that is not cured or waived within any applicable cure periods, in addition to other remedies that may be available to the lenders, the obligations under the 2022 Revolving Credit Facility may be accelerated.

 

The agreements governing our A/R Programs also contain certain receivable performance metrics. Any material failure to meet the applicable A/R Programs’ metrics could lead to an early termination event under the A/R Programs, which could require us to cease our use of such facilities, prohibiting us from additional borrowings against our receivables or, at the discretion of the lenders, requiring that we repay the A/R Programs in full. An early termination event under the A/R Programs would also constitute an event of default under our 2022 Revolving Credit Facility, which could require us to pay off the balance of the 2022 Revolving Credit Facility in full and could result in the loss of our 2022 Revolving Credit Facility. 

 

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.​