Albemarle borrows $900 million bank debt for purchase; leverage rises

By Devika Patel

Knoxville, Tenn., Nov. 7 – Albemarle Corp. borrowed $900 million under an unsecured credit facility to fund its recently completed acquisition of a 60% interest in Mineral Resources Ltd.’s Wodgina spodumene mine in Western Australia for $1.3 billion, consisting of a cash payment of $820 million and the transfer to Mineral Resources of a 40% interest in two lithium hydroxide conversion trains being built by Albemarle at Kemerton in Western Australia.

This transaction will raise the company’s net debt to adjusted EBITDA leverage ratio to 2.6x from 1.6x at the end of the last quarter.

“With the close of the [Mineral Resources] deal, we estimate our gross debt to adjusted EBITDA ratio to move from 1.9x to around 2.8x and net debt to EBITDA to be around 2.6x,” executive vice president and chief financial officer Scott Tozier said on the company’s third quarter ended Sept. 30 earnings conference call on Thursday.

“We have funded our payment associated with the new joint venture by borrowing approximately $1 billion under an unsecured credit facility.

“We expect that this borrowing, along with other corporate funding activity, may ultimately be converted to long-term debt given attractive economics,” he said.

Adjusted EBITDA was $254.4 million for the quarter.

Cash and cash equivalents were $317,823,000 as of Sept. 30, 2019, compared to $555.32 million as of Dec. 31, 2018.

Long-term debt was $1,381,984,000 as of Sept. 30, 2019, compared to $1,397,916,000 as of Dec. 31, 2018.

Albemarle is a Baton Rouge, La., specialty chemicals company.

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