Calumet Specialty Products To Buy ADF Holdings In $235 Mln Deal - Quick Facts

(RTTNews) - Calumet Specialty Products Partners L.P. (CLMT), producer of specialty hydrocarbon and fuel products, announced that it agreed to acquire ADF Holdings Inc., the parent company of Tulsa, Oklahoma-based Anchor Drilling Fluids USA Inc. on a debt-free basis for total cash consideration of about $235 million, subject to customary purchase price adjustments.

Calumet expects to close the acquisition of Anchor by March 31, 2014, subject to customary closing conditions.

Privately-held Anchor, established by Bob and Phil West in 2005, is a provider of drilling fluid solutions, completion fluids and production chemicals to the oil and gas industry with more than 30 manufacturing, mixing, storage and distribution facilities in 13 states.

For the year ended December 31, 2012, Anchor generated earnings before interest, taxes, depreciation and amortization ("EBITDA") of approximately $26.3 million.

Separately, Calumet Specialty Products Partners and its wholly owned subsidiary Calumet Finance Corp. announced that they intend to offer for sale to eligible purchasers, in a private placement, $850 million in aggregate principal amount of senior unsecured notes due 2021.

Calumet intends to use the net proceeds from the private placement to fund the approximately $235 million purchase price of its previously announced pending acquisition of ADF Holdings, Inc., the parent company of Anchor Drilling Fluids USA, Inc., and related expenses and the redemption of all $500 million aggregate principal amount of its outstanding 9 3/8% senior unsecured notes due 2019.

Any remaining funds will be used for general partnership purposes, including planned capital expenditures at its facilities. If the Anchor Acquisition does not close by June 30, 2014, or the acquisition agreement is terminated before then, Calumet will be required to offer to purchase up to $235 million principal amount of the 2021 Notes at 100% of the initial offering price plus accrued interest.

Concurrently with the closing of the private placement, Calumet intends to issue notice to redeem in full all outstanding 2019 Notes on April 30, 2014. The redemption price will be a "make-whole" redemption price calculated in accordance with the indentures governing the 2019 Notes, based on specified treasury rates that will be determined prior to the redemption date.

Based on current treasury rates, Calumet estimates that the total redemption price for all outstanding 2019 Notes will be about $567.2 million, excluding accrued and unpaid interest, and will result in a charge to income of about $86.6 million, including a non-cash write off of previously incurred transaction expenses.