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KRA > SEC Filings for KRA > Form 8-K on 1-Apr-2013All Recent SEC Filings

Show all filings for KRATON PERFORMANCE POLYMERS, INC. | Request a Trial to NEW EDGAR Online Pro

Form 8-K for KRATON PERFORMANCE POLYMERS, INC.


1-Apr-2013

Entry into a Material Definitive Agreement, Termination of a Ma


Item 1.01 - Entry into a Material Definitive Agreement.

The registrant, referred to below as the Parent, and certain of its affiliated entities have entered into a loan, security and guarantee agreement and related pledge agreement to replace the registrant's existing credit agreement, all as described more fully in this current report.

Senior Secured Credit Facilities

Overview

On March 27, 2013, Kraton Polymers U.S. LLC, (the "Initial U.S. Borrower"), along with, Kraton Polymers Nederland B.V. (the "Initial Dutch Borrower" and together with the Initial U.S. Borrower, the "Borrowers" and each a "Borrower"), Kraton Performance Polymers, Inc. ("Parent"), Kraton Polymers LLC ("KPLLC"), Elastomers Holdings LLC ("Elastomers") and Kraton Polymers Capital Corporation ("KPCC") (together with Parent, the "Guarantors"), entered into a loan, security and guarantee agreement (the "Loan Agreement") and related pledge agreement (the "Pledge Agreement") with certain lenders and Bank of America, N.A., as administrative agent and collateral agent, to establish a new asset-based revolving credit facility consisting of a U.S. senior secured revolving credit facility and a Dutch senior secured revolving credit facility (the "Senior Secured Credit Facilities"), to replace the existing senior secured credit facility established pursuant to the credit agreement dated as of February 11, 2011 as amended, among Kraton Performance Polymers, Inc., as a guarantor, Kraton Polymers LLC, as borrower, the other guarantors named therein, the lenders named therein and Bank of America, N.A., as administrative agent (the "Existing Senior Secured Credit Facilities").

The Loan Agreement provides for senior secured financing of up to $250 million consisting of:

(1) a $150 million U.S. senior secured revolving credit facility, of up to which $30 million may be utilized for the issuance of letters of credit, and of up to which the lesser of (a) $15 million and (b) 10% of the U.S. revolver commitments may be made available as short-term borrowings upon same-day notice, referred to as swingline loans, provided the amount of such swingline loans does not exceed U.S. borrowing availability at the time of funding; and

(2) a $100 million Dutch senior secured revolving credit facility, of up to which $20 million may be utilized for the issuance of letters of credit, and of up to which the lesser of (a) $10 million and (b) 10% of the Dutch revolver commitments may be made available as short-term borrowings upon same-day notice, referred to as swingline loans.

The Borrowers may request up to an aggregate of $100 million of additional revolving facility commitments of which up to an aggregate of $40 million may be additional Dutch revolving facility commitments, subject to additional conditions described in the Loan Agreement, and provided that the U.S. revolver commitment is at least 60% of the commitments after giving effect to such increase.

Interest Rates and Fees

U.S. borrowings under the U.S. revolving credit facility (other than swingline loans) bear interest at a rate equal to, at the applicable Borrower's option, either (a) a base rate determined by reference to the greatest of (1) the prime rate of Bank of America, N.A., (2) the federal funds rate plus 0.50% and
(3) LIBOR plus 1.0%, or (b) a rate based on LIBOR, in each case plus an applicable margin. U.S. swingline loans shall bear interest at a base rate determined by reference to the greatest of (1) the prime rate of Bank of America, N.A., (2) the federal funds rate plus 0.50% or (3) LIBOR plus 1.0%, in each case plus an applicable margin.

Dutch borrowings under the Dutch revolving credit facility bear interest at a rate equal to, at the applicable Borrower's option, either (a) a fluctuating rate, with respect to Euros, Pounds Sterling and Dollars outside of the U.S. and Canada, equal to the rate announced by the European Central Bank and used as a base rate by the local branch of Bank of America in the jurisdiction in which such currency is funded, or (b) a rate based on LIBOR, in each case plus an applicable margin.

The applicable margin is subject to a minimum of 0.5% and a maximum of 1.0% with respect to U.S. base rate loans, and a minimum of 1.5% and maximum of 2.0% for foreign base rate borrowings and LIBOR loans. The applicable margin is subject to adjustment based on the Borrowers' excess availability for the most recent fiscal quarter.

In addition to paying interest on outstanding principal under the Senior Secured Revolving Credit Facilities, the Borrowers will be required to pay a commitment fee in respect of the unutilized commitments at an annual rate of 0.375% times the average daily amount by which the Dutch revolver commitments exceed the Dutch revolver exposure and 0.375% times the average daily amount by which the U.S. revolver commitments exceed the U.S. revolver exposure, as well as pay letter of credit fees and agency fees.

Guarantees and Security

All secured obligations under the Loan Agreement are unconditionally guaranteed by Parent, the Initial U.S. Borrower, KPLLC, KPCC, Elastomers and all other U.S. Borrowers and U.S. Guarantors. The foreign facility secured obligations and the agreements of the foreign borrowers are also unconditionally guaranteed by the Dutch Borrowers and the Dutch Guarantors.


All secured obligations under the Loan Agreement are secured by specified assets of the U.S. Borrowers and U.S. Guarantors (other than Parent), and the Dutch facility secured obligations are further secured, subject to certain exceptions, by specified assets of the Dutch Borrowers and Dutch Guarantors, including
(a) accounts, (b) inventory, (c) chattel paper, instruments, letters of credit, general intangibles (other than intellectual property), as each of the aforementioned relates to accounts or inventory, (d) commodities accounts, deposit accounts and securities accounts, to the extent any proceeds of the collateral described in (a) through (c) above are deposited therein, (e) monies, cash and deposits, including cash collateral to the extent related to the foregoing, and (e) all accessions to, substitutions for, replacements and proceeds of the foregoing.

All secured obligations under the Loan Agreement are also secured by certain equity interests pledged by Parent, Initial U.S. Borrower, KPLLC and Elastomers pursuant to the Pledge Agreement.

Payments and Prepayments

The Borrowers are permitted to voluntarily prepay outstanding revolver loans from time to time, without penalty or premium, other than customary breakage costs with respect to LIBOR loans. If a disposition of U.S. facility collateral not in the ordinary course of business results in cash consideration in excess of $5 million, all net proceeds from such disposition must be applied to the . . .



Item 1.02 - Termination of a Material Definitive Agreement

On March 27, 2013, Kraton Polymers LLC and Kraton Performance Polymers, Inc. repaid in full all outstanding amounts (including principal, accrued and unpaid interest, expenses and fees) payable under the Existing Senior Secured Credit Facility, and terminated the Existing Senior Secured Credit Facilities.

A summary of the terms of the Existing Senior Secured Credit Facility is included in Kraton Performance Polymers, Inc's Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and is incorporated by reference herein.



Item 2.03 - Creation of a Direct Financial Obligation

The information set forth under Item 1.01 above is incorporated by reference into this Item 2.03.



Item 9.01 - Financial Statements and Exhibits.

Exhibit
Number                                     Exhibit

10.1        Loan Agreement dated as of March 27, 2013 among Kraton Performance
            Polymers, Inc., as a Guarantor, Kraton Polymers U.S. LLC, as a U.S.
            Borrower, Kraton Polymers Nederland B.V., as a Dutch Borrower, the
            other Guarantors named therein, the Lenders named therein, and Bank of
            America, N.A., as Administrative Agent and Collateral Agent.

10.2        Pledge Agreement dated as of March 27, 2013 among Kraton Polymers U.S.
            LLC, as a U.S. Borrower, Kraton Polymers LLC and Kraton Performance
            Polymers, Inc., as Pledgors, the other Pledgors named therein, and
            Bank of America, N.A., as Collateral Agent for the holders of the
            Secured Obligations.


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