Annual report pursuant to Section 13 and 15(d)

Note 14 - Debt

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Note 14 - Debt
12 Months Ended
Dec. 31, 2022
Notes to Financial Statements  
Debt Disclosure [Text Block]

14. DEBT

 

Outstanding debt, net of debt issuance costs, of consolidated entities consisted of the following (dollars in millions):

 

 

   

December 31,

 
   

2022

   

2021

 

Senior Credit Facilities:

               

Revolving facility

  $ 55     $  

Amounts outstanding under A/R programs

    166        

Senior notes

    1,455       1,473  

Variable interest entities

    35       45  

Other

    26       32  

Total debt

  $ 1,737     $ 1,550  

Total current portion of debt

  $ 66     $ 12  

Long-term portion of debt

    1,671       1,538  

Total debt

  $ 1,737     $ 1,550  

 

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. These debt agreements 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 in the face amount of that debt liability. As of December 31, 2022 and 2021, the amount of debt issuance costs directly reducing the debt liability was $8 million and $10 million, respectively. We record the amortization of debt issuance costs as interest expense.

 

Revolving Credit Facility

 

On May 20, 2022, Huntsman International entered into 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. In connection with entering into the 2022 Revolving Credit Facility, Huntsman International terminated all commitments and repaid all obligations under its 2018 $1.2 billion senior unsecured credit facility.

 

The following table presents certain amounts under our 2022 Revolving Credit Facility as of December 31, 2022 (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     $ 55

(1)

  $

(1)

  $ 55

(1)

Term Secured Overnight Financing Rate ("SOFR") plus 1.475%

    May 2027  

(1) On December 31, 2022, we had an additional $13 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 as of December 31, 2022 was 1.475% above term SOFR.

 

Term Loan Credit Facility

 

On September 24, 2019, Huntsman International entered into the 2019 Term Loan, pursuant to which Huntsman International borrowed an aggregate principal amount of €92 million (or $101 million equivalent). We used the net proceeds from the 2019 Term Loan to finance our acquisition of the 50% noncontrolling interest that we did not own in the Sasol-Huntsman maleic anhydride joint venture. On September 22, 2020 we repaid the 2019 Term Loan in full at maturity.

 

A/R Programs

 

Our 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 July 1, 2021, we entered into amendments to our A/R Programs that, among other things, extended the respective scheduled termination dates of our A/R Programs from April 2022 to July 2024.

 

Information regarding our A/R Programs as of December 31, 2022 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     $ 81

(3)

Applicable rate plus 0.90%

EU A/R Program

 

July 2024

  100     80  

Applicable rate plus 1.30%

       

(or approximately $106)

   

(or approximately $85)

   

(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 USD LIBOR. The applicable rate for our EU A/R Program is either USD LIBOR, EURIBOR or SONIA (Sterling Overnight Interbank Average Rate). In anticipation of the transition away from USD LIBOR, the amendments we made in July 2021 to our A/R Programs incorporated replacement rates for the USD LIBOR.

(3)

As of December 31, 2022, we had approximately $8 million (U.S. dollar equivalents) of letters of credit issued and outstanding under our U.S. A/R Program.

 

As of December 31, 2022 and December 31, 2021, $272 million and $324 million, respectively, of accounts receivable were pledged as collateral under our A/R Programs.

 

Senior Notes

 

As of December 31, 2022, we had outstanding the following notes (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 (€299 carrying value $(318))

  $ 1  

2029 Senior Notes

 

February 2029

    4.50 %  

$750 ($740 carrying value)

    10  

2031 Senior Notes

 

June 2031

    2.95 %  

$400 ($397 carrying value)

    3  

 

The 2025, 2029 and 2031 Senior Notes are general unsecured senior obligations of Huntsman International. The indentures impose certain limitations on the ability of Huntsman International and its subsidiaries to, among other things, incur additional indebtedness secured by any principal properties, incur indebtedness of subsidiaries, enter into sale and leaseback transactions with respect to any principal properties and consolidate or merge with or into any other person or lease, sell or transfer all or substantially all of its properties and assets. Upon the occurrence of certain change of control events, holders of the 2025, 2029 and 2031 Senior Notes will have the right to require that Huntsman International purchase all or a portion of such holder’s notes in cash at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase.

 

The 2025 Senior Notes bear interest at 4.25% per year, payable semi-annually on April 1 and October 1, and are due on April 1, 2025. Huntsman International may redeem the 2025 Senior Notes in whole or in part at any time prior to January 1, 2025 at a price equal to 100% of the principal amount thereof plus a ‘‘make-whole’’ premium and accrued and unpaid interest.

 

The 2029 Senior Notes bear interest at 4.50% per year, payable semi-annually on May 1 and November 1, and will mature on May 1, 2029. Huntsman International may redeem the 2029 Senior Notes in whole or in part at any time prior to February 1, 2029 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 2029 Senior Notes at any time, in whole or from time to time in part, on or after February 1, 2029 at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest.

 

On January 15, 2021, we redeemed in full €445 million (approximately $541 million) in aggregate principal amount of our 2021 Senior Notes at the redemption price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest to, but not including, the redemption date. In connection with this redemption, we incurred an incremental cash tax liability of approximately $15 million in the first quarter of 2021 related to foreign currency exchange gains.

 

On May 26, 2021, Huntsman International completed a $400 million offering of its 2031 Senior Notes. On June 23, 2021, Huntsman International applied the net proceeds from the offering, along with cash on hand, to redeem in full $400 million in aggregate principal amount of its 2022 Senior Notes and to pay accrued but unpaid interest of approximately $2 million. In addition, we paid redemption premiums and related fees and expenses of approximately $25 million and recognized a corresponding loss on early extinguishment of debt of $26 million in the second quarter of 2021.

 

The 2031 Senior Notes bear interest at 2.95% per year, payable semi‑annually on June 15 and December 15 of each year, and will mature on June 15, 2031. Huntsman International may redeem the 2031 Senior Notes in whole or in part at any time prior to March 15, 2031 at a price equal to 100% of the principal amount thereof plus a “make‑whole” premium as of, and accrued and unpaid interest, if any, to, but not including, the date of redemption. Huntsman International may redeem the 2031 Senior Notes at any time in whole or from time to time in part, on or after March 15, 2031 at a price equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to, but not including, the date of redemption. ​

 

Variable Interest Entity Debt

 

As of December 31, 2022, AAC, our consolidated 50%-owned joint venture, had $35 million outstanding under its loan commitments and debt financing arrangements. As of December 31, 2022, we have $9 million classified as current debt and $26 million as long-term debt on our 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

 

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 governing our material debt instruments, including our 2022 Revolving Credit Facility, our A/R Programs and our notes.

 

Maturities

 

The scheduled maturities of our debt (excluding debt to affiliates) by year as of December 31, 2022 are as follows (dollars in millions):

 

Year ending December 31,

       

2023

  $ 66  

2024

    178  

2025

    331  

2026

    10  

2027

    3  

Thereafter

    1,149  
    $ 1,737