Calumet may cut debt ratio without lower borrowings, CFO says

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Calumet Specialty Products Partners LP plans to lower its leverage by increasing earnings rather than cutting debt that is rising by 35.6 percent this month, according to Chief Financial Officer Patrick Murray.

Indianapolis-based Calumet sold $900 million of 6.5-percent notes due April 2021 on March 31 to finance a $235 million acquisition and to redeem $500 million of 9.375-percent bonds due May 2019, according to a March 26 statement. That is boosting total debt to $1.525 billion from $1.125 billion, increasing the ratio of debt to adjusted earnings before interest, taxes, depreciation and amortization to about 5.6 from 4.7, according to data from the statement and company filings.

The processor of crude petroleum into a variety of lubricating oils, solvents and waxes has a long-term goal of returning leverage to below 4 times, Murray said last week. He declined to comment on when that might happen.

“These senior notes are more part of the permanent capital structure that’s in place,” Murray said about reducing leverage. “It becomes more of a matter of enhanced earnings than debt reduction.”

Calumet had $241.5 million of adjusted EBITDA in 2013, according to a March 3 regulatory filing. The company acquired ADF Holdings Inc, the parent company of Anchor Drilling Fluids USA Inc., which had more than $30 million of EBITDA in 2013, according to Calumet spokesman Noel Ryan.

The company is paying a “make-whole” price to call the 9.375 percent bonds, which will cost $567.2 million, excluding accrued and unpaid interest, according to the statement.

Calumet shares were up 1.9 percent Monday morning, to $28.13 each.


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  1. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

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