Crompton seeking new $600 million credit facility

By Sara Rosenberg

New York, May 16 - Crompton Corp. is in-market with a new $600 million credit facility, a company spokesperson told Prospect News on Monday. Citigroup and Bank of America are leading the deal.

The facility, which will have general revolver availability plus support for letters of credit, will be used to replace the company's existing $220 million credit facility consisting of a $120 million revolver and a $100 million pre-funded letter-of-credit facility.

As part of getting the larger credit facility, the company announced on Monday that it began a consent solicitation to amend its bond indentures to allow for the increased debt capacity. Under the existing bond indentures the company can only incur up to $300 million of credit facility debt.

The new credit facility, which launched via a bank meeting earlier this month, according to the spokesperson, is contingent on several factors, including the closing of the proposed merger between Crompton and Great Lakes Chemical Corp.

"Increasing our credit facility to $600 million will provide greater financial flexibility to Crompton following our pending merger with Great Lakes. We believe that a credit facility of this size is both adequate and appropriate for Crompton's normal liquidity requirements following the merger," said Karen Osar, chief financial officer, in the release.

"Crompton has a variety of alternatives available to it to ensure access to adequate liquidity for operating purposes post-merger, including a securitization of available receivables at both Great Lakes and Crompton. While these alternatives could satisfactorily meet Crompton's liquidity needs, we believe the enhanced flexibility and administrative ease of one larger credit facility provide the best solution for the combined company, which is why we have undertaken this Consent Solicitation," Osar added in the release.

On March 9, Crompton and Great Lakes announced an agreement to merge in an all-stock transaction. Under the terms of the agreement, the Great Lakes shareholders will receive 2.2232 shares of Crompton's common stock for each share of Great Lakes common stock they hold. The transaction, which is subject to regulatory approval and approval by shareholders of both companies, is expected to close in mid-2005. Following the close of the merger, the new company will be named Chemtura Corp.

Crompton is a Middlebury, Conn., producer and marketer of specialty chemicals and polymer products.

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