UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
Current
Report
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
Report (date of earliest event reported): December 19, 2007
MILLENNIUM
CHEMICALS INC.
(Exact
name of registrant as specified in its charter)
Delaware
(State
or
other jurisdiction of incorporation)
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1-12091
(Commission
File Number)
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22-3436215
(I.R.S.
Employer Identification No.)
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Two
Greenville Crossing,
4001
Kennett Pike, Suite 238
Greenville,
Delaware
(Address
of principal executive offices)
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19807
(Zip
Code)
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(713)
652-7200
(Registrant’s
telephone number, including area code)
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Introductory
Note
Millennium
Chemicals Inc. (“Millennium”) is a direct wholly owned subsidiary of Lyondell
Chemical Company (“Lyondell”). On December 20, 2007, Lyondell completed its
merger (the “Merger”) with BIL Acquisition Holdings Limited (“Merger Sub”), an
indirect wholly owned subsidiary of Basell AF S.C.A. (which was renamed
LyondellBasell Industries AF S.C.A. in connection therewith and is referred
to
herein as “Parent”), pursuant to the terms and conditions of the Agreement and
Plan of Merger dated as of July 16, 2007 among Parent, Merger Sub and Lyondell
(the “Merger Agreement”). As a result of the Merger, Millennium
became an indirect, wholly-owned subsidiary of Parent. Parent is
controlled by Access Industries, a privately held, U.S.-based industrial
group,
of which Len Blavatnik is its chairman and principal shareholder. The
diagram below represents a condensed version of the LyondellBasell Industries
AF
S.C.A. corporate and capital structure after giving effect to the Merger
and
financing transactions described in this Current Report on Form 8-K, as well
as
certain other transactions to which Millennium was not a party.
2
_____________________
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(1)
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AI
Petrochemicals LLC, which is controlled by Access Industries,
indirectly
owns approximately 97% of Parent.
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(2)
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The
2015 Notes are senior obligations of Parent and are guaranteed
on a senior
subordinated basis by those entities that are borrowers or guarantors
under the Senior Secured Credit Facilities and the Interim
Loan.
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(3)
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The
Interim Loan is a senior obligation of LyondellBasell Finance
Company
guaranteed on a senior basis by Parent and certain subsidiaries,
including
Lyondell and Millennium and certain of their subsidiaries. Each
of the entities shaded in gray guarantees or is a borrower under
the
Interim Loan and the Senior Secured Credit Facilities. Certain
other subsidiaries of Parent (including certain of the subsidiaries
included in the “Basell Non-U.S. Subsidiaries” box of the diagram) also
guarantee the Interim Loan and the Senior Secured Credit
Facilities. Those material subsidiaries that did not provide
guarantees are generally subject to legal or contractual restrictions
that
limit their ability to give guarantees. All entities that
guarantee the 2015 Notes also guarantee the Interim Loan and
guarantee or
are borrowers under the Senior Secured Credit
Facilities.
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(4)
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The
Senior Secured Credit Facilities comprise a $2,000 million term
loan A
facility, a $7,550 million and €1,300 million term loan B facility and a
$1,000 million revolving credit facility. Basell Holdings B.V.,
Basell Germany Holdings GmbH, Basell Finance Company B.V. and
Lyondell are
the borrowers under the Senior Secured Credit Facilities. Each
of the other entities shaded in gray guarantees the Senior Secured
Credit
Facilities. The entities that are guarantors and borrowers
under the Senior Secured Credit Facilities (excluding LyondellBasell
Finance Company, which is the borrower under the Interim Loan)
are the
same entities that guarantee the Interim
Loan.
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(5)
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The
Asset-Based Facilities include an inventory facility of up to
$1,000
million and a receivables facility of up to $1,150
million. Lyondell, Houston Refining LP and Equistar Chemicals,
LP, each of which is an indirect wholly owned subsidiary of Lyondell,
and
Basell USA Inc. (an entity included in the “Basell U.S. Subsidiaries” box
of the diagram) are borrowers under the inventory facility. The
inventory facility is guaranteed by each domestic subsidiary
of a borrower
that is a guarantor under the Senior Secured Credit Facilities
(other than
Equistar Chemicals, LP and Houston Refining LP). Lyondell,
Equistar Chemicals, LP and Houston Refining LP are originators
under the
receivables facility.
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(6)
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Foreign
subsidiaries of Lyondell, excluding French subsidiaries and certain
joint
venture investments, were sold to subsidiaries of Basell
Holdings. These former Lyondell Non-U.S. Subsidiaries are held
indirectly by Basell Holdings through
subsidiaries.
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(7)
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Parent
and its subsidiaries are subject to the restrictive covenants
under the
Interim Loan and the Senior Secured Credit
Facilities.
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(8)
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The
entities comprising the “Basell U.S. Subsidiaries” (which includes Basell
USA Inc.) and Lyondell are indirect wholly owned subsidiaries
of
LyondellBasell Finance Company. Of the entities comprising the
“Basell U.S. Subsidiaries,” only Basell USA Inc. is a borrower under the
inventory facility of the Asset-Based
Facilities.
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(9)
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Certain
Basell Non-U.S. Subsidiaries are held by Basell Germany Holdings
and
others are owned by other subsidiaries of Basell
Holdings.
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3
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Item
1.01
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Entry
into a Material Definitive
Agreement.
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Supplemental
Indenture - 4% Convertible Notes due 2023
On
December 20, 2007, in connection with the Merger, Millennium and Millennium
America Inc., a wholly owned subsidiary of Millennium (“Millennium America”),
and The Bank of New York, as Trustee, entered into a Third Supplemental
Indenture (“Convertible Notes Supplemental Indenture”). The
Convertible Notes Supplemental Indenture amends and supplements that certain
Indenture between Millennium, Millennium America and the Bank of New York
dated
as of November 25, 2003, as heretofore supplemented (the “Convertible Notes
Indenture”), with respect to Millennium’s 4% Convertible Senior Debentures due
2023 (the “Convertible Notes”). As of December 20, 2007,
approximately $43.6 million principal amount of Convertible Notes remained
outstanding. The Convertible Notes Supplemental Indenture provides
that, during the period the Convertible Notes shall be convertible as specified
in Section 15.01 of such Indenture, the outstanding Convertible Notes shall
be convertible into $3,636.6384 per $1,000 principal amount of Convertible
Notes, which is equal to the amount of cash receivable upon the Merger by
a
holder of common stock of Lyondell issuable upon conversion of such Convertible
Notes immediately prior to the Merger.
Amendment
of Equistar Partnership Agreement
On
December 19, 2007, the partners of Equistar Chemicals LP, a Delaware limited
partnership of which Millennium indirectly owns an aggregate 21% interest
(“Equistar”), entered into an Amended and Restated Limited Partnership Agreement
of Equistar dated as of December 19, 2007 (the “Amended and Restated Partnership
Agreement”). Among other things, the Prior Partnership Agreement was
amended to (1) permit non pro-rata capital contributions by partners under
certain circumstances, (2) provide for more flexibility in the composition
of
the Partnership Governance Committee of Equistar and (3) effect certain changes
relating to the Millennium Indemnity provisions. The Amended and
Restated Partnership Agreement also reflects that on December 18, 2007, Lyondell
LP4 Inc., a Delaware corporation, a wholly owned subsidiary of Lyondell and
a
partner of Equistar, elected to convert its interest in Equistar from a limited
partner interest to a general partner interest and to become the Managing
General Partner of Equistar, as it was permitted to do at its election without
the consent of Equistar or the other partners thereof pursuant to Section
6.11
of the Amended and Restated Limited Partnership Agreement of Equistar dated
as
of November 29, 2004. The Amended and Restated Partnership Agreement
is attached as Exhibit 4.1 to this Current Report on Form 8-K and is
incorporated herein by reference.
Millennium
Indemnity
Millennium
Petrochemicals Inc., a Virginia corporation and a wholly owned subsidiary
of
Millennium (“MPI”), entered into an indemnity agreement dated as of December 19,
2007 with Equistar (the “Indemnity”), pursuant to which MPI may be required to
contribute to Equistar an amount equal to up to the lesser of $300 million
or
the sum of the aggregate principal amount of the following obligations then
outstanding: (i) Equistar’s Debentures due 2026 in the principal
amount of $150 million (ii) up to $150 million of any bank borrowings of
Equistar secured by its inventory, and (iii) to the extent $150 million exceeds
any bank borrowings secured by inventory, trade accounts payable by Equistar
to
unrelated parties up to the amount equal to $150 million less the bank
borrowings secured by inventory (together, the “Referenced Obligations”).
However, pursuant to the terms of the Indemnity, the MPI is only required
to pay
this amount to Equistar if the holders of the Referenced Obligation have
not
been able to obtain payment after pursuing and exhausting all their remedies
against Equistar, including the liquidation of Equistar's assets. The Indemnity
expressly does not create any right in favor of such holders or any person
other
than MPI, Equistar and the partners in Equistar. The Indemnity may be amended
or
terminated at any time by the agreement of MPI and Equistar without the consent
of the holders of the Referenced Obligations. Unless earlier
terminated, the indemnity terminates on December 15, 2017.
4
The
information set forth relating to the Senior Secured Credit Facilities, Interim
Loan, ABF Inventory Facility and 2015 Notes in Item 2.03 of this Current
Report
on Form 8-K is incorporated by reference in this Item 1.01.
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Item
2.03
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Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a
Registrant
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Senior
Secured Credit Facilities
In
connection with the Merger, Lyondell, as successor to Merger Sub, became
a
borrower under a senior secured credit agreement dated as of December 20,
2007
between, among others, Merger Sub, Basell Holdings B.V., a wholly owned
subsidiary of Parent (“Basell Holdings”), Basell Finance Company B.V., a wholly
owned subsidiary of Parent (“Basell Finance”), Basell Germany Holdings GmbH, a
wholly owned subsidiary of Basell Holdings (“Basell Germany Holdings”), Parent,
as a guarantor, certain subsidiaries of Parent, including Millennium and
certain
of its subsidiaries, as subsidiary guarantors, and Citibank, N.A., as
Administrative Agent, U.S. Swing Line Lender and Collateral Agent, Citibank,
N.A., London Branch, as European Swing Line Lender, and Citigroup Global
Markets
Inc., Goldman Sachs Credit Partners, L.P., Merrill Lynch, Pierce, Fenner
&
Smith Incorporated, ABN AMRO Incorporated and UBS Securities LLC as joint
lead
arrangers and joint bookrunners (the “Senior Secured Credit
Facilities”).
Structure
The
Senior Secured Credit Facilities provide for the following:
• a
senior secured tranche A term loan facility of $2,000 million;
• a
senior
secured tranche B term loan facility of $7,550 million and €1,300 million;
and
• a
senior secured multicurrency revolving credit facility of $1,000
million.
Borrowings
under the term loan facilities were used, together with approximately $130
million of borrowings under the revolving credit facility and borrowings
under
the Asset-Based Facilities (as defined below) and the Interim Loan (as defined
below), to finance the Merger, repay indebtedness of Lyondell and its
subsidiaries, as well as of Parent and its subsidiaries and pay related fees
and
expenses. The revolving credit facility may be used to finance the
general corporate requirements of Parent and its subsidiaries (including
Lyondell).
5
Borrowers
$500
million of the tranche A term loan facility was borrowed by Basell Holdings
with
the remaining portion borrowed by Merger Sub (which subsequently merged with
and
into Lyondell). €1,300 million of the tranche B term loan facility
was borrowed by Basell Germany Holdings with the remaining $7,550 million
borrowed by Merger Sub. The revolving loans were made available to
Merger Sub and will be made available to Lyondell, Basell Finance, Basell
Holdings and Basell Germany Holdings.
Interest
and Fees
At
the
option of the applicable borrower, loans under the Senior Secured Credit
Facilities bear interest at rates per annum equal to:
either
(i) adjusted LIBOR (or, in the case of euro loans, EURIBOR) plus the applicable
margin or (ii) the higher of (A) the federal funds rate plus 0.5% and (B)
the
prime rate plus the applicable margin.
The
applicable margin and unused commitment fee are subject to a pricing grid
based
on the First Lien Senior Secured Leverage Ratio (as defined in the Senior
Secured Credit Facilities).
Guarantees
The
Senior Secured Credit Facilities are guaranteed irrevocably and unconditionally,
jointly and severally on a senior secured basis by Parent and certain of
its
subsidiaries, including Millennium and certain of its subsidiaries.
Security
The
borrowers and certain guarantors under the Senior Secured Credit Facilities
granted first priority security interests over all of their present and after
acquired material assets. In addition, such borrowers and guarantors
granted first-priority security interests over the share capital of certain
of
their subsidiaries in favor of the lenders under the Senior Secured Credit
Facilities.
Covenants
The
Senior Secured Credit Facilities contain customary covenants, subject to
certain
agreed exceptions, including covenants restricting the ability of Parent,
each
borrower and each guarantor (and in certain cases, the subsidiaries of such
borrowers or guarantors) to, among other things:
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incur,
assume or permit to exist indebtedness or
guarantees;
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incur,
assume or permit to exist liens;
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make
loans and investments;
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declare
dividends, make payments on or redeem or repurchase capital
stock;
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engage
in mergers, acquisitions, and other business
combinations;
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prepay,
redeem or purchase certain
indebtedness;
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amend
or otherwise alter terms of certain indebtedness, and other material
agreements;
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make
dispositions of assets;
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engage
in transactions with affiliates;
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enter
into or permit to exist contractual obligations limiting the ability
of
the Parent and certain of its subsidiaries to make distributions
or to
incur or permit to exist liens; and
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alter
the conduct of business.
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6
The
Senior Secured Credit Facilities require Parent to comply
with the following financial covenants:
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First
Lien Senior Secured Leverage Ratio: a maximum First Lien
Senior Secured Leverage Ratio of
3.75:1.0;
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Consolidated
Debt Service Ratio: a minimum consolidated debt service
ratio (as defined in the Senior Secured Credit Facilities) of 1.1:1.0;
and
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Capital
Expenditures: a maximum level of capital expenditures per
year.
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The
Senior Secured Credit Facilities include equity cure provisions with respect
to
breaches of financial covenants.
Repayment
The
term
A loans have a final maturity of six years. The amortization schedule
results in a weighted average life of 4.75 years. The tranche B term
loan facility amortizes at 1% per annum of the initial principal amount of
the
tranche B term loan facility (which is payable in quarterly installments)
with
all remaining amounts paid at maturity. The term B loans have a
maturity of seven years.
All
amounts outstanding under the revolving credit facility have a final maturity
of
six years.
Prepayments
Subject
to certain exceptions, mandatory prepayments are required to be made out
of,
among others, the following:
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100%
of net cash proceeds from certain events including certain sales,
transfers, leases and other disposals, casualty and insurance events
and
recovery events;
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100%
of net cash proceeds of the incurrence of indebtedness;
and
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for
any fiscal year (commencing with the fiscal year ending December
31,
2008), a portion of excess cash
flow.
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7
The
borrowers may voluntarily prepay amounts outstanding under the tranche A
term
loan facility, the tranche B term loan facility and the revolving facility
at
any time without penalty or premium.
Events
of Default
The
Senior Secured Credit Facilities set out customary events of default, the
occurrence of which would allow the lenders to accelerate all outstanding
loans
and terminate their commitments.
Hedging
Arrangements
The
borrowers are required to enter into and maintain hedging agreements for
at
least three (3) years that result in at least 50% of Parent's consolidated
total
debt (excluding revolving loans and excluding debt under securitizations
and
receivables financings transactions and asset-based facilities over $2.0
billion) being fixed-rate indebtedness. For purposes of this covenant, the
Interim Loan is treated as fixed-rate indebtedness.
Interim
Loan
In
connection with the Merger, Lyondell, Millennium and certain of their
subsidiaries became guarantors under the Interim Loan dated as of December
20,
2007 (the “Interim Loan”), between, among others, LyondellBasell Finance
Company, a wholly owned subsidiary of Parent, of which Millennium is an indirect
wholly owned subsidiary, as borrower (“LyondellBasell Finance”), Parent as a
guarantor, certain subsidiaries of Parent, including Millennium and certain
of
its subsidiaries, as subsidiary guarantors, and Merrill Lynch Capital
Corporation, Citigroup Global Markets Inc., Goldman Sachs Credit Partners,
L.P.,
ABN AMRO Incorporated and UBS Securities LLC as joint lead arrangers and
joint
bookrunners (the “Interim Loan Agreement”).
Structure
The
Interim Loan Agreement provides for a facility of $8,000 million that ranks
equally in right of payment with all of LyondellBasell Finance’s existing and
future senior indebtedness and senior to all of LyondellBasell Finance’s current
and future subordinated indebtedness.
Borrowings
under the Interim Loan were used, together with certain borrowings under
the
Senior Secured Credit Facilities and borrowings under the Asset-Based
Facilities, to finance the Merger, repay indebtedness of Lyondell and its
subsidiaries, as well as of Parent and its subsidiaries and pay related fees
and
expenses.
8
Interest
and Fees
Loans
under the Interim Loan bear interest at rates per annum equal to LIBOR plus
a
margin.
The
initial margin will increase after the first six months by an additional
0.50%
for each consecutive three-month period thereafter.
Guarantees
All
obligations under the Interim Loan are guaranteed by the same entities that
are
borrowers or guarantors under the Senior Secured Credit Facilities irrevocably
and unconditionally, jointly and severally on a senior secured
basis.
Security
The
same
entities that granted security interests under the Senior Secured Credit
Facilities granted a second-priority security interest in favor of the lenders
under the Interim Loan over the collateral securing the lenders under the
Senior
Secured Credit Facilities.
Covenants
The
Interim Loan agreement contains customary incurrence based covenants which
include, among others, restrictions on the ability of Parent and its restricted
subsidiaries to:
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incur
additional indebtedness;
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make
restricted payments;
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create
certain liens;
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sell
assets;
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in
the case of restricted subsidiaries, enter into arrangements that
restrict
dividends or other payments to
Parent;
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engage
in transactions with affiliates;
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create
unrestricted subsidiaries; and
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consolidate,
merge or transfer all or substantially all of our assets and the
assets of
our subsidiaries on a consolidated
basis.
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9
Repayment
Any
loan
outstanding under the Interim Loan on the first anniversary of the date of
completion of the Merger will be automatically converted into a senior secured
loan, to be repaid in full on the eighth anniversary of the date of completion
of the Merger. The extended loans will be guaranteed by the same
guarantors as the initial loans and will be secured, on a second ranking
basis,
with the same assets that secured the initial loans. At any time on
or after such conversion date, at the option of the applicable lender, such
loans may be exchanged in whole or in part for exchange notes; the exchange
notes will be guaranteed by the same guarantors as the extended loans and
will
be secured, on a pari passu basis with the extended loans, with the
same assets that security extended loans subject to certain limited
exceptions. The exchange notes will benefit from customary
registration rights.
Prepayments
Mandatory
prepayments are required to be made out of, among others, net cash proceeds
from:
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the
issuance of any indebtedness, the purpose of which is to refinance
the
loans under the Interim Loan;
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subject
to the prior repayment of loans outstanding under the Senior Secured
Credit Facilities, any non-ordinary course asset sales by Parent
or any of
its subsidiaries;
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certain
insurance recovery payments; and
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the
issuance of equity securities of, or capital contributions to,
LyondellBasell Finance (other than proceeds of equity investments
by
Parent).
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Events
of Default
The
Interim Loan Agreement sets out customary events of default, the occurrence
of
which would allow the lenders to accelerate all outstanding loans and terminate
their commitments.
2015
Notes
In
connection with the Merger, Lyondell and its subsidiaries that became borrowers
or guarantors under the Senior Secured Credit Facilities, including Millennium
and certain of its subsidiaries, also became guarantors under the Parent’s $615
million and €500 million in aggregate principal amount of 8⅜% Senior Notes due
2015 (the “2015 Notes”). The 2015 Notes were issued pursuant to an
indenture dated as of August 10, 2005 (the “2005 Indenture”) between, amongst
others, Parent, each of the guarantors named therein, as guarantors, and
The
Bank of New York, as Trustee. The notes are senior obligations of
Parent. The guarantees are senior subordinated obligations of each of
the guarantors. For a description of the subordination provision
applicable to these guarantees, see the description of the Intercreditor
Agreement (as defined below) set forth elsewhere in this Current Report on
Form
8-K.
10
Interest
Payments
Interest
on the 2015 Notes is payable semi-annually at an annual rate of 8⅜% on February
15 and August 15 of each year.
Redemption
and Repurchase
Parent
may redeem some or all of the 2015 Notes on or prior to August 15, 2010 by
paying 100% of the principal amount of such 2015 Notes plus a make whole
premium. At any time on or after August 15, 2010, Parent may redeem
some or all of the 2015 Notes at customary redemption prices.
At
any
time before August 15, 2008, Parent may redeem up to 35% of the aggregate
principal amount of each series of 2015 Notes with the net proceeds of certain
equity offerings at 108.375% of the principal amount of such notes, plus
accrued
interest, if at least 65% of the originally issued aggregate principal amount
of
each series of 2015 Notes remains outstanding.
Guarantee
of the 2015 Notes
Parent’s
obligations under the 2015 Notes are jointly and severally guaranteed on
an
unsecured senior subordinated basis by certain entities that were subsidiaries
of Parent prior to the Merger. In connection with Merger, the other
entities which are borrowers or guarantors under the Senior Secured Credit
Facilities, including Millennium and certain of its subsidiaries, entered
into a
supplemental indenture to the 2015 Indenture under which they guarantee the
2015
Notes on a senior subordinated basis.
Security
Parent’s
obligations under the 2015 Notes are secured by a second priority pledge
of the
loan of the proceeds of the issuance of the 2015 Notes from Parent to Basell
Holdings (the “2015 High Yield Proceeds Loan”) and 100% of the shares of Basell
Funding S.à r.1., a wholly owned subsidiary of Parent. Subject to the
terms of the Intercreditor Agreement, the 2015 High Yield Proceeds Loan is
repayable at the same time as the repayment in full or in part of amounts
due
under the 2015 Notes, whether at maturity, on early redemption or mandatory
repurchase or upon acceleration. The 2015 High Yield Proceeds Loan is
subordinated in right of payment to the Senior Secured Credit Facilities
to the
same extent as the guarantee of Basell Holdings is subordinated to guarantor
senior debt and is subject to the Intercreditor Agreement.
Covenants
The
2015
Indenture contains customary covenants which include, among others, restrictions
on the ability of Parent and its restricted subsidiaries to:
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incur
additional indebtedness;
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make
restricted payments;
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create
certain liens;
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sell
assets;
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enter
into sale and leaseback
transactions;
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issue
or sell preferred stock;
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in
the case of restricted subsidiaries, enter into arrangements that
restrict
dividends or other payments to
Parent;
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engage
in transactions with affiliates;
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create
unrestricted subsidiaries; and
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consolidate,
merge or transfer all or substantially all of our assets and the
assets of
our subsidiaries on a consolidated
basis.
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11
Events
of Default
The
2015
Indenture contains customary events of default.
10¼%
Debentures due 2010 and 9.8% Debentures due 2020
Lyondell,
as successor by merger to the obligations of ARCO Chemical Company (“ARCO
Chemical”), is the obligor with respect to $100 million in aggregate principal
amount of 10¼% Debentures due 2010 and $225 million in aggregate principal
amount of 9.8% Debentures due 2020 (collectively, the “ARCO Chemical
Debentures”), issued by ARCO Chemical pursuant to an indenture dated
as of June 15, 1988 between ARCO Chemical and The Bank of New York, as Trustee,
as heretofore supplemented (the “ARCO Chemical Indenture”). Prior to
the Merger, the ARCO Chemical Debentures were unsecured. Pursuant to
the terms of the ARCO Chemical Indenture, in connection with the Merger and
related financing transactions, the ARCO Chemical Debentures became equally
and
ratably secured with the property held directly by Lyondell that secures
the
Senior Secured Credit Facilities and the Interim Loan, including four operating
plants (the propylene glycol (PG) and propylene glycol ethers (PGE) plants
at
Lyondell’s Bayport facility and the butanediol (BDO) and methyl tertiary butyl
ether (MTBE) plants at Lyondell’s Channelview facility) and the capital stock of
Lyondell’s directly owned subsidiaries.
7.55%
Senior Notes due 2026
Lyondell
issued $150 million in aggregate principal amount of 7.55% Senior Notes due
2026
(the “2026 Notes”) pursuant to an Indenture dated as of January 29, 1996 between
the Company and Texas Commerce Bank National Association, as Trustee, as
heretofore supplemented (the “2026 Indenture”). The 2026 Notes were assumed by
Equistar from Lyondell in connection with Equistar’s formation in
1997. Lyondell remains a guarantor of the 2026
Notes. Prior to the Merger the 2026 Notes were
unsecured. In connection with financing transactions for the Merger,
the Senior Secured Credit Facilities and the Interim Loan are expected to
become
secured by certain restricted properties (as defined in the 2026 Indenture)
of
Equistar. The 2026 Indenture generally defines restricted properties
to be (i) any plant for the production of petrochemicals and (ii) shares
of
capital stock or indebtedness of a subsidiary which owns property described
in
clause (i). Pursuant to the terms of the 2026 Indenture, when the
Senior Secured Credit Facilities and the Interim Loan become secured by any
such
restricted property, the 2026 Notes will become equally and ratably secured
with
the restricted property that secures such facilities.
12
7⅝%
Millennium Senior Unsecured Notes due 2026
On
November 21, 1996, Millennium America issued $250 million in aggregate principal
amount of 7⅝% Senior Unsecured Notes due 2026 (the “Millennium Notes”) pursuant
to an indenture dated as of November 27, 1996 (the “Millennium Indenture”),
among Millennium America, Millennium, as Guarantor, and The Bank of New York,
as
Trustee, as supplemented by the First Supplemental Indenture dated as of
November 21, 1997. Millennium America’s obligations under the
Millennium Notes are jointly and severally guaranteed by Millennium. There
are
currently $241 million of the Millennium Notes outstanding. Under the
terms of the Millennium Indenture, Millennium America and certain of its
subsidiaries may not issue, assume or guarantee any debt secured by liens
upon
certain restricted properties (as defined in the Millennium Indenture), without
providing that any Millennium Notes are secured equally and ratably to such
debt. The Millennium Notes were unsecured prior to the Merger and
remain unsecured after giving effect to the Merger and the financing
transactions described elsewhere in this Current Report on Form 8-K since
Millennium America and its subsidiaries did not pledge any property as
collateral under the Interim Loan and Senior Secured Credit
Facilities.
Asset-Based
Inventory Facility
In
connection with the Merger, Millennium and certain of its subsidiaries became
guarantors under a $1,000 million senior secured inventory-based credit facility
dated as of December 20, 2007 (the “ABF Inventory Facility”) by and among
Lyondell, Houston Refining LP, an indirect wholly owned subsidiary of Lyondell
(“Houston Refining”), Equistar and Basell USA Inc., a wholly owned subsidiary of
LyondellBasell Finance (“BUSA” and, together with Lyondell, Houston Refining and
Equistar, the “ABF Borrowers”), Citigroup Global Markets Inc., Goldman Sachs
Credit Partners L.P., Merrill Lynch Capital Corporation, ABN AMRO Incorporated
and UBS Securities LLC (collectively, the “Arrangers”), Citibank, N.A., JPMorgan
Chase Bank N.A., and other banks acting in the capacity of issuers of letters
of
credit (collectively, the “Issuers”), Citicorp USA, Inc. (the “Inventory
Administrative Agent”) and the lenders party thereto (the “ABF
Lenders”).
Structure
The
ABF
Inventory Facility provides for a revolving credit facility made available
to
the ABF Borrowers in a principal amount of the lesser of $1,000 million or
a
borrowing base. The ABF Inventory Facility provides for advances, the
issuance of letters of credit and swingline loans. The ABF Inventory
Facility provides for an incremental increase at the option of the ABF
Borrowers. The total amount of such increase in the ABF Inventory
Facility plus any increase permitted under the ABF Receivables Facility (as
defined below) may not exceed $600 million.
13
The
ABF
Borrowers are jointly and severally liable for all obligations under the
ABF
Inventory Facility.
Approximately
$175 million in proceeds of the ABF Inventory Facility were used together
with
certain borrowings under the Senior Secured Credit Facilities, proceeds under
the ABF Receivables Facility and the borrowings under the Interim Loan to
finance the Merger, repay indebtedness of Lyondell and its subsidiaries,
as well
as of Parent and its subsidiaries and pay related fees and
expenses. Proceeds of the ABF Inventory Facility may also be used to
finance general corporate purposes.
The
ABF
Inventory Facility will terminate on the fifth anniversary of the closing
date
or the earlier termination of the facility pursuant to the terms thereof
(the
“Termination Date”) and all loans outstanding under the ABF Inventory Facility
will be due and payable on the Termination Date.
Interest
and Fees
Loans
under the ABF Inventory Facility bear interest, at the option of the ABF
Borrowers, at one of the following rates:
|
|
•
|
the
applicable margin plus the Alternate Base Rate (as defined
below), calculated on a 365/366-day basis and payable monthly in
arrears;
or
|
|
|
•
|
the
applicable margin plus the current LIBO Rate (as defined below)
calculated on a 360-day basis and payable at the end of the relevant
interest period, but in any event at least
quarterly.
|
“Alternate
Base Rate” means the highest of (i) Citibank’s base rate, (ii) the three-month
certificate of deposit rate plus 1/2 of 1% and (iii) the federal funds effective
rate plus 1/2 of 1%.
“LIBO
Rate” means the current LIBO rate as quoted by Telerate page 3750, adjusted for
reserve requirements, if any, and subject to customary change of circumstance
provisions, for interest periods of one, two, three or six months, or of
one
week if available to all lenders.
The
ABF
Borrowers will be required to pay a non-refundable unused commitment fee
on the
daily average unused portion of the ABF Inventory Facility (whether or not
then
available), payable quarterly in arrears and on the Termination
Date.
A
percentage per annum equal to the applicable letter of credit margin to the
lenders, and a fixed percentage per annum to the Issuers, will accrue on
the
outstanding undrawn amount of any letter of credit, payable quarterly in
arrears
and computed on a 360-day basis.
Security
and Guarantees
The
ABF
Inventory Facility is guaranteed on an unsecured basis by each domestic
subsidiary of an ABF Borrower that guarantees the obligations under the Senior
Secured Credit Facilities (other than Equistar and Houston Refining), on
terms
and subject to limitations consistent with those applicable to the Senior
Secured Credit Facilities. All amounts owing by the ABF Borrowers
under the ABF Inventory Facility (including, without limitation, any exposure
of
a lender in respect of cash management transactions incurred on behalf of
the
ABF Borrowers, the guarantors or their subsidiaries) are secured the following
property of each ABF Borrower that grants a security interest to the ABF
Lenders
and other secured parties (each such person a “Lien Grantor”), (i) a first
priority perfected pledge of all equity interests owned by a Lien Grantor
in,
and all indebtedness owed to a Lien Grantor by, LyondellBasell Receivables
I,
LLC (the Seller under the ABF Receivables Facility) and Basell Capital
Corporation, a wholly owned subsidiary of BUSA; and (ii) a first priority
perfected security interest in all accounts, inventory and related assets
owned
by each Lien Grantor, subject to customary exceptions for transactions of
this
type. As of the date hereof, Lyondell is not a Lien
Grantor.
14
Availability
Availability
under the ABF Inventory Facility is, at any date, an amount equal to the
lesser
of (i) the then effective commitments under the ABF Inventory Facility and
(ii)
the borrowing base on such date.
Triggering
Events
Each
of
the following events will constitute a “Triggering Event” under the ABF
Inventory Facility:
|
|
(a)
|
the
Termination Date;
|
|
|
(b)
|
the
occurrence of an event of default under the ABF Inventory
Facility;
|
|
|
(c)
|
total
collateral availability being less than $225 million for any period
of
five (5) consecutive business days;
|
|
|
(d)
|
total
excess availability being less than $200 million for any period
of five
consecutive business days unless on each day during that period
both (x)
total collateral availability is greater than or equal to $275
million and
(y) total excess availability is greater than or equal to $150
million;
or
|
|
|
(e)
|
total
collateral availability being less than $200 million on any business
day;
|
provided
that, (A) if, following a Triggering Event described in clause (b), the related
event of default ceases to exist, such Triggering Event shall cease to exist
and
(B) if, following a Triggering Event described in clause (c), (d) or (e),
total
collateral availability subsequently equals or exceeds $250 million for a
period
of 20 consecutive business days such Triggering Event shall cease to exist
upon
the first day following such 20-business day period.
Prepayments
Optional
prepayments may be made at any time without premium or
penalty. Mandatory prepayments are required to be made out of, among
other things, net cash proceeds from sales of collateral not in the ordinary
course of business and, upon certain events, other asset sales, subject to
customary exceptions, and insurance and condemnation awards involving
collateral, and, upon certain events, other casualty events, in each case
received by any ABF Borrower or guarantor or certain of their subsidiaries
in
excess of agreed amounts.
15
Events
of Default, Affirmative and Negative Covenants
The
ABF
Inventory Facility contains affirmative and negative covenants, applicable
to
the ABF Borrowers and guarantors, and in certain cases their respective
subsidiaries, and events of default (including total excess availability
being
less than $100 million for a period of two consecutive business days) which
are
substantially similar to those in the Senior Secured Credit Facilities, with
certain modifications and other provisions consistent with the terms of
Millennium’s prior asset-based loan facilities.
Financial
Covenant
The
ABF
Borrowers agree that if for any period of four consecutive fiscal quarters
the
fixed charge coverage ratio calculated for such period is less than 1.10:1.0,
then the ABF Borrowers shall not permit to exist a period of five consecutive
business days during the fiscal quarter immediately following such four
consecutive fiscal quarter period during which total excess availability
is less
than $200 million on each such business day, unless on each such business
day
total excess availability is at least $150 million and total collateral
availability is at least $275 million. Furthermore, the proceeds of
loans under the ABF Inventory may not be used to make certain dividends or
distributions (other than to Lyondell or certain of its subsidiaries and
to BUSA
or certain of its subsidiaries) in the event that either (i) a default under
the
ABF Inventory Facility has occurred and is continuing or (ii) the daily average
total excess availability fails to exceed $225 million on any business day
during the five consecutive business days prior to the date of such dividend
or
distribution. Additionally, the ABF Inventory Facility is also
subject to a cap on capital expenditures substantially similar to the covenant
on maximum capital expenditures in the Senior Secured Credit
Facilities.
Asset-Based
Receivables Facility
In
connection with the Merger, Lyondell entered into a $1,150 million receivables
securitization facility dated as of December 20, 2007 (the “ABF Receivables
Facility” and, together with the ABF Inventory Facility, the “Asset-Based
Facilities”) pursuant to a receivables purchase agreement by and among
LyondellBasell Receivables I, LLC (the “Seller”), Lyondell, as servicer,
Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., Merrill
Lynch
Capital Corporation, ABN AMRO Incorporated and UBS Securities LLC (the “RF
Arrangers”), Citicorp USA, Inc. or an affiliate (the “RF Administrative Agent”)
and certain purchasers party thereto, and accompanying receivables sale and
undertaking documentation entered into by Lyondell, Equistar, Houston Refining
and any other subsidiary of Lyondell or the Parent designated from time to
time
thereunder (the “Originators”). In connection with the Merger,
approximately $1,060 million of receivables were sold under the ABF Receivables
Facility. None of Millennium or its subsidiaries are parties to
the ABF Receivables Facility and accordingly it is not described
herein.
16
Intercreditor
Agreement
In
connection with the closing of the Merger, Lyondell, Millennium, the Parent
and
the other borrowers and guarantors under the Senior Secured Credit Facilities
and certain intercompany borrowers and certain intercompany lenders entered
into
an amended and restated intercreditor agreement dated as of December 20,
2007
(the “Intercreditor Agreement”) with the agent under the Senior Secured Credit
Facilities (the “Senior Agent”), the agent under the Interim Loan (the “Interim
Agent”), the agent under the ABF Inventory Facility (the “ABL Agent”), and the
trustees under the 2015 Indenture, the ARCO Chemical Indenture and the 2026
Indenture among others.
Ranking
The
Intercreditor Agreement provides that indebtedness outstanding under the
Senior
Secured Credit Facilities, the ABF Inventory Facility, the Interim Facility,
the
2015 Indenture and certain other debt of the group will rank in right and
priority of payment in the following order.
At
the
subsidiaries of Parent:
|
|
•
|
first,
the indebtedness under the Senior Secured Credit Facilities, the
ABF
Inventory Facility and the Interim Facility, pari
passu;
|
|
|
•
|
second,
the guarantees of the 2015 Notes and the High Yield Proceeds Loan;
and
|
|
|
•
|
third,
intercompany debt.
|
At Parent:
|
|
•
|
first,
the guarantee by Parent of indebtedness under the Senior Secured
Credit
Facilities, the Interim Facility, and Parent’s obligations under the 2015
Notes, pari passu; and
|
|
|
•
|
second,
certain indebtedness to Parent’s shareholders and intercompany debt (other
than the High Yield Proceeds Loan).
|
The
ranking in right and priority of payment of (i) the 8.10% Guaranteed Notes
due
2027 of Basell Finance, (ii) the ARCO Chemical Debentures, (iii) the 2026
Notes
and (iv) the Millennium Notes is not governed by the Intercreditor
Agreement. The Intercreditor Agreement also does not purport to
govern any obligations associated with the receivables facility under the
Asset-Based Facilities or any other securitization transaction.
17
Priority
of Security
The
transaction security (other than the 2015 Collateral, the ARCO Chemical
Collateral and Equistar Collateral, each as defined below) ranks and secures
indebtedness outstanding under the Senior Secured Credit Facilities, the
Interim
facility in the following order:
|
|
•
|
first,
the indebtedness under the Senior Secured Credit Facilities;
and
|
|
|
•
|
second,
the indebtedness under the Interim
Facility.
|
The
“2015
Collateral” consists of (i) a pledge of High Yield Proceeds loan and (ii) a
pledge of the shares of Basell Funding S.à r.l. The 2015 Collateral
ranks and secure indebtedness in the following order:
|
|
•
|
first,
the indebtedness under the Senior Secured Credit Facilities and
the
Interim Facility, pari passu;
and
|
|
|
•
|
second,
the 2015 Notes.
|
The
“ARCO
Chemical Collateral” consists of the assets held directly by Lyondell which
secure the indebtedness under the Senior Secured Credit Facilities including
four operating plants and the capital stock of its directly owned
subsidiaries. The ARCO Chemical Collateral ranks and secures
indebtedness in the following order:
|
|
•
|
first,
the indebtedness under the Senior Secured Credit Facilities, and
the ARCO
Chemical Debentures; pari passu;
and
|
|
|
•
|
second,
the indebtedness under the Interim
Facility.
|
The
“Equistar Collateral” consists of pledges, mortgages and other security interest
in assets which constitute “restricted properties” (as defined in the 2026
Indenture) of Equistar and its subsidiaries. The 2026 Indenture
generally defines restricted properties to be (i) any plant for the production
of petrochemicals and (ii) shares of capital stock or indebtedness of a
subsidiary which owns property described in clause (i). The Equistar
Collateral ranks and secures indebtedness in the following order:
|
|
•
|
first,
the indebtedness under the Senior Secured Credit Facilities and
the 2026
Notes, pari passu; and
|
|
|
•
|
second,
the indebtedness under the Interim
Facility.
|
This
ranking will not apply to the costs and expenses of the security agent, the
agents and the Trustee and the trustees under the applicable indentures in
respect of any enforcement.
Payment
Blockage
The
intercreditor agreement does not permit the lenders under the Senior Secured
Credit Facilities, the Senior Agent or the Trustee to block Parent from making
payments on the 2015 Notes. However, if Parent or any of its
subsidiaries default on a payment under the Senior Secured Credit Facilities,
the ABF Inventory Facility, or the Interim Facility, its subsidiaries may
not
make payments on their guarantees of the 2015 Notes or payments on the High
Yield Proceeds Loan unless all such payment defaults have been waived or
cured.
18
Standstill
on Enforcement for 2015 Notes
At
any
time following a default under the 2015 Indenture or the 2015 Notes, the
trustee
under the 2015 Indenture may bring an action to enforce the 2015 Notes or
the
2015 Indenture. The Intercreditor Agreement does not restrict
enforcement of the 2015 Notes or the 2015 Indenture against
Parent. However, the Intercreditor Agreement does restrict
enforcement of the guarantees of the 2015 Notes and of the High Yield Proceeds
Loan and the any enforcement action in respect of 2015 Collateral.
Enforcement
of Security
Enforcement
action with respect to the Collateral may only be taken by the security agent
upon instructions of the Senior Agent until all priority indebtedness has
been
paid in full.
After
all
indebtedness outstanding under the Senior Secured Credit Facilities have
been
repaid in full, enforcement action with respect to the collateral may only
be
taken by the security agents upon instructions at the Interim Agent for so
long
as any amounts are outstanding under the Interim Facility, and thereafter
the
trustee.
ABF
Intercreditor Agreement
In
connection with the closing of the Merger, Lyondell, the other Originators,
the
other ABF Borrowers, the Seller, the ABL Agent, the RF Administrative Agent
and
the Senior Agent entered into an intercreditor agreement dated as of December
20, 2007 (the “ABF Intercreditor Agreement”), addressing the priorities and
related rights as among (i) the Senior Secured Credit Facilities, the Interim
Loan and certain high yield notes of the Parent, (ii) the ABF Inventory Facility
and (iii) the ABF Receivables Facility. The ABF Intercreditor Agreement sets
out
the various priorities with respect to receivables assets and collateral
under
the ABF Inventory Facility.
|
Item
5.01
|
Changes in Control
of
Registrant
|
On
December 20, 2007, as a result of the Merger, Lyondell, and accordingly
Millennium, became an indirect, wholly owned subsidiary of
Parent. Parent is controlled by Access Industries, a privately held,
U.S.-based industrial group, of which Len Blavatnik is its chairman and
principal shareholder. The aggregate purchase price for all of the
outstanding common stock of Lyondell was approximately $12.45 billion, which
purchase price was funded by the Senior Secured Credit Facilities, Interim
Loan
and Asset-Based Facilities described in Item 2.03 of this Current Report
on Form
8-K.
|
Item
9.01
|
Financial Statements and Exhibits |
|
(d)
|
Exhibits.
|
|
4.1
|
Amended and Restated Limited Partnership Agreement of Equistar Chemicals, LP dated as of December 19, 2007 |
19
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
MILLENNIUM
CHEMICALS INC.
By:/s/
Kerry A. Galvin
Name: Kerry
A.
Galvin
Title: Senior
Vice President and
General
Counsel
Date: December
26, 2007
20
INDEX
TO EXHIBITS
|
Exhibit
Number
|
Description
|
|
| 4.1 | Amended and Restated Limited Partnership Agreement of Equistar Chemicals, LP dated as of December 19, 2007 |
21