Global leader in the field of specialty chemicals, Clariant has prepaid its syndicated term loans. The move simplifies Clariant's debt liabilities, increases its issuing flexibility and significantly reduces the number of its bank lenders. It also enables the company to take advantage of lower interest rates and longer maturities commensurate with its recent investment grade rating.
A total of CHF 1,060 million of syndicated term debt has been repaid, which would ordinarily mature between 2006 and 2009. The repayment sum includes the outstanding debt, interest prepayment compensation and swap unwinding costs. Clariant has used approx. CHF 750 million of excess cash to repay these lines and drawing down on more flexible revolving credit facilities refinanced the balance.
Retiring this debt early has incurred total one-time costs of up to CHF 70 million, which will appear on 2005's P&L. However, as an investment grade borrower, this cost will swiftly be recouped by the lower interest rates that Clariant can now command.
"Repaying syndicated term loan facilities is an important step in simplifying and optimizing liabilities," said Chief Financial Officer Francois Note. "Now debt is rated investment grade, they can take advantage of preferential rates available on alternative facilities. This is another important milestone for us and is in line with the goals of Transformation Program." Clariant was assigned issuer ratings 'BBB' from Standard & Poor's and 'Baa2' from Moody's in November.
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