Item 1.01 Entry into a Material Definitive Agreement.
Sale and Leaseback Transaction
On September 30, 2024, Calumet Montana Refining, LLC (“Calumet Montana”), a subsidiary of Calumet, Inc. (the “Company”), entered into a Master Lease Agreement (together with Equipment Schedule No. 1 thereto, the “Lease Agreement”) with Stonebriar Commercial Finance LLC (“Stonebriar”) related to a sale and leaseback transaction (the “Sale and Leaseback Transaction”). Pursuant to the Sale and Leaseback Transaction, Calumet Montana sold to and leased back from Stonebriar certain equipment comprising the specialty asphalt refinery located in Great Falls, Montana (the “Refinery Assets”), for a total purchase price of up to $150.0 million. Calumet Montana received $110.0 million of the total purchase price on September 30, 2024 and the remaining purchase price of up to $40.0 million will be disbursed to the Company at the closing of a financing contemplated by Montana Renewables, LLC (“MRL”), an unrestricted, non-guarantor subsidiary of Calumet Specialty Products Partners, L.P. (the “Partnership”) for purposes of the agreements governing the Partnership’s indebtedness. There can be no assurance that such financing will close. The Partnership is a direct subsidiary of the Company. Calumet intends to use the proceeds from the Sale and Leaseback Transaction to repay borrowings outstanding under the Credit Agreement (as defined below).
Monthly rental payments of approximately $1.9 million are payable over nine years under the Lease Agreement, beginning on October 1, 2024, which represents a cost of capital of approximately 10.75% per year assuming the total purchase price of $150.0 million is fully drawn. The Lease Agreement provides that, subject to certain conditions described in the Lease Agreement, Calumet Montana may terminate the lease and repurchase all or a part of the Refinery Assets, including the right to repurchase all Refinery Assets for $59.7 million at the 97th month of the Lease Agreement. The Company has also guaranteed to Stonebriar the performance of Calumet Montana’s obligations under the Lease Agreement.
The foregoing description of the Lease Agreement is not complete and is qualified in its entirety by reference to the complete text of the Lease Agreement, which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.
Amendment to MRL Equipment Schedules
On September 30, 2024, MRL entered into the Lease Amendment (the “MRL Lease Amendment”) with Stonebriar to amend Equipment Schedule No. 1, dated as of December 30, 2022, Equipment Schedule No. 2, dated as of August 5, 2022, and Equipment Schedule No. 3, dated as of September 29, 2023 (each, an “Equipment Schedule” and, collectively, the “Equipment Schedules”). Each Equipment Schedule sets forth lease terms that incorporate part of that certain Master Lease Agreement, dated as of December 31, 2021, by and among MRL and Stonebriar. The MRL Lease Amendment amended each Equipment Schedule to, among other changes, permit an additional early termination option contingent upon successful additional financing by MRL.
The foregoing description of the MRL Lease Amendment is not complete and is qualified in its entirety by reference to the complete text of the MRL Lease Amendment, which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.
Consent and Sixth Amendment to Third Amended and Restated Credit Agreement
On September 30, 2024, in connection with the Sale and Leaseback Transaction, the Company entered into the Consent and Sixth Amendment (the “Sixth Amendment”) to the Third Amended and Restated Credit Agreement dated February 23, 2018 (the “Credit Agreement”), by and among the Company, Calumet GP, LLC, the Partnership, certain subsidiaries of the Partnership party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent. The Sixth Amendment amended the Credit Agreement to, among other changes, (i) permit the Sale and Leaseback Transaction, and (ii) to remove the Refinery Assets from the determination of the borrowing base under the Credit Agreement, on the terms and conditions set forth in the Sixth Amendment.
The foregoing description of the Sixth Amendment is not complete and is qualified in its entirety by reference to the complete text of the Sixth Amendment, which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.
