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Element Solutions Inc, a global and diversified specialty chemicals company, announced that it successfully completed the syndication of a seven-year secured term loan credit facility totaling $1.15 billion under its credit agreement.
ESI used the proceeds of the new $1,150 million term loan B-2 facility, together with cash on hand, to prepay its existing $1,105 million term loan B-1 tranche and $150 million term loan A.
Except for its maturity date, the new term loan B-2 tranche has substantially the same terms as the former term loan B-1 tranche, including its applicable interest rate of SOFR plus a spread of 2.00% per annum.
In connection with the funding of the new term loan B-2 tranche, ESI monetized existing interest rate and cross-currency swap agreements initially scheduled to mature in 2024 and 2026. ESI subsequently entered into new interest rate and cross-currency swap agreements, which effectively converted $760 million of the term loan B-2 tranche, a U.S. dollar denominated debt obligation, into fixed-rate euro-denominated debt at a fixed EUR all-in rate of 4.31%. These new swaps are set to mature in 2028. The balance of $390 million remains subject to existing swaps scheduled to mature in 2025.
Chief Financial Officer Carey Dorman said, “Through this transaction, we are reducing gross debt by over $100 million and extending the majority of our secured debt maturities to 2030 without increasing their margin. With our new swaps in place, we now have approximately 80% of our capital structure fixed until 2028, effectively mitigating interest rate risk from the ongoing higher rate environment. We have been working over the past year to further improve our already healthy balance sheet and believe we have made substantial progress.”
