Middlebury, Connecticut
December 30, 2008
Chemtura Corporation (NYSE:CEM) announced that it had today
entered into an amendment and waiver agreement with the lenders
under its senior credit facility, as well as with the providers
of its U.S. accounts receivable securitization facility. The
Company further advised that it intends to replace its U.S.
accounts receivable securitization facility before the end of
January 2009.
Craig A. Rogerson, Chairman, President and CEO, commented: "As
the recession takes hold, the deterioration in business
conditions has impacted Chemtura's financial performance and
outlook. We are grateful for the support and prompt action by
our lenders to address the immediate impact of these changes."
Mr. Rogerson continued, "The amendments and waivers provide
Chemtura with the time we need to continue the orderly progress
of our asset sales process and to implement actions to reduce
our costs and manage cash flow. Further, we will have more
clarity as to the underlying customer demand as their inventory
reduction actions work through the global supply chain."
Like many companies, Chemtura saw order volumes decline sharply
in November and December as its customers experienced, or
anticipated, reductions in demand from the industries they
serve. These order reductions primarily related to Chemtura's
Polymer Additives and Performance Specialties business segments
in electronic, polyolefin, building and construction and general
industrial applications. With significant reductions in sales
volume and higher manufacturing variances, the Company concludes
that it will report an operating loss for the fourth quarter,
2008. In light of this deterioration in financial performance,
the Company requested, and its lenders have granted, a 90-day
waiver of its compliance with the financial maintenance
covenants under its senior credit facility.
The amendment and waiver agreement with the lenders under its
senior credit facility required, among other matters, a
permanent reduction in the facility commitments from $740
million to $500 million and a grant of a security interest in
the Company's U.S. inventory, subject to certain limitations as
provided under the Company's bond indentures. Certain of those
lenders have expressed their non-binding intention to subscribe
to a replacement accounts receivable securitization facility
with up to $150 million of capacity and a three-year term,
subject to the completion of a field audit, execution of
mutually satisfactory definitive agreements and certain other
conditions. The lenders' and the Company's desire is to enter
into this new facility before the end of January 2009. Lenders
who participate will reduce their commitments to the senior
credit agreement pro-rata to their participation in the new
securitization facility.
The Company has also entered into an amendment and waiver
agreement with the providers of its U.S. accounts receivable
securitization facility. Among other matters, the agreement
provides for a 90-day waiver of its compliance with the
financial maintenance covenants under the senior credit
agreement and a permanent reduction in the facility size from
$275 million to $100 million. The facility will terminate upon
the effectiveness of the replacement U.S. accounts receivable
securitization facility.
Citibank, N.A. is administrative agent for the senior credit
facility. The Royal Bank of Scotland, plc (as successor to ABN
AMRO N.V.), is administrative agent for the U.S. accounts
receivable securitization facility. Citibank Global Markets Inc.
is arranger for the replacement U.S. accounts receivable
securitization facility.
In light of reduced demand and with the expectation the
implementation of an upgraded management system will improve the
efficiencies of business and management processes, Chemtura is
implementing the restructuring initiative it previously
announced on December 11, 2008 to reduce cash fixed costs by
approximately $50 million on an annualized basis. This
initiative involves a worldwide reduction in its professional
and administrative staff by approximately 500 staff, which
represents a reduction of about 20 percent of the professional
and administrative population.
The Company is also adjusting its plant production rates to
align with customer demand and its inventory reduction goals and
is modifying work hours, furloughing or reducing production
personnel as required. As a result, a significant number of the
Company's Polymer Additives facilities have been idled in the
latter part of December. These actions are providing additional
cost reductions. Production at these facilities will be restored
as customer demand dictates.
The changes in financial performance during the fourth quarter
2008 and the outlook in 2009 have led the Company to conclude an
impairment has occurred to the carrying value of its goodwill.
The Company will quantify and record a non-cash goodwill
impairment charge in its fourth quarter 2008 financial results,
together with charges related to its new restructuring program
and the expenses related to the above-mentioned amendment and
waiver agreements. Chemtura expects to release its fourth
quarter and full year financial results in late February 2009.
The amendment and waiver agreements referenced in this release
are today being filed on Form 8-K with the Securities and
Exchange Commission.
Chemtura Corporation (NYSE:CEM), with 2007 sales of $3.7
billion, is a global manufacturer and marketer of specialty
chemicals, crop protection products, and pool, spa and home care
products. Learn more about us on our Web site at
www.chemtura.com |
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