Calumet Inc. (NASDAQ: CLMT) Announces $150 Million Sale-Leaseback Deal with Stonebriar Commercial Finance LLC
Calumet, a leading North American manufacturer of specialty branded products and renewable fuels, has entered into a new financial arrangement with Stonebriar Commercial Finance LLC. The deal involves the sale and leaseback of assets by Calumet's subsidiary, Calumet Montana Refining, LLC (CMR), for a total of $150 million.
CMR has already received $110 million from the transaction, with an additional $40 million contingent upon a future Eligible Capital Event. These funds will be used by Calumet to reduce its outstanding borrowings under its revolving credit facility. The cost of capital for this deal is approximately 10.75%, and it includes strategic early termination options.
In a related move, Montana Renewables, LLC (MRL), another Calumet subsidiary, has revised its existing agreements with Stonebriar. These amendments allow for early termination following potential proceeds from an Eligible Capital Event, which may involve a loan guarantee from the U.S. Department of Energy (DOE).
If MRL decides to terminate the agreements early and repurchase its assets, including a Renewable Diesel Unit, Renewable Hydrogen Plant, and Pretreatment Unit, the cost would be around $403 million if done by November 1. These assets were part of a previous sale and leaseback transaction that provided $400 million in funding to MRL.
Calumet's CEO, Todd Borgmann, expressed appreciation to Stonebriar for their support, highlighting the flexibility these agreements provide to Montana Renewables while allowing Stonebriar to maintain a stake in Calumet's capital structure.
Investors and interested parties should be aware that certain statements in this press release may be forward-looking and involve risks and uncertainties. It is advised to refer to Calumet's filings with the SEC for further details and risk considerations.
In other recent news, Calumet Inc. reported a strong Q1 EBITDA of $21.6 million and repaid $50 million of its 2025 notes, demonstrating a commitment to debt reduction. TD Cowen adjusted its outlook on Calumet, lowering the price target but maintaining a Buy rating. Despite industry challenges, Calumet remains optimistic about future investor engagement and positive EBITDA contribution from Montana Renewables.
InvestingPro Insights:
Calumet's recent sale-leaseback deal aligns with the company's current financial position, aiming to reduce outstanding borrowings and improve the balance sheet. While the company faces profitability challenges, the strategic move could enhance operational flexibility.
InvestingPro Tips indicate that Calumet is not currently profitable, with analysts not expecting profitability this year. However, the company has shown positive revenue growth, strong returns over the last five years, and volatile stock price movements.
For a more in-depth analysis, InvestingPro offers additional tips and insights on Calumet Specialty Products Partners, with a focus on financial restructuring and operational performance.
This content provides valuable information for investors and individuals interested in understanding Calumet's recent financial transactions and their potential impact on the company's future performance and investor engagement.