LSB Industries Inc., Oklahoma City, Okla., on Sept. 27 announced that it has closed the previously announced transaction with LSB Funding LLC, an affiliate of Eldridge Industries LLC, to exchange the shares of LSB Series E-1 and Series F-1 Redeemable Preferred Stock held by Eldridge for shares of LSB common stock.
The exchange transaction, which was approved by LSB’s stockholders during a Special Meeting on Sept. 22, involved the exchange of $310 million of preferred stock into an equivalent value of LSB common stock based on an exchange price of $6.16, which is equal to the 30-day volume weighted average price as of the date of the Exchange Agreement.
In connection with the transaction, the company will pay existing LSB common stockholders a special dividend in the form of 0.30 shares of LSB common stock for every share owned as of the Sept. 24 special dividend record date. Upon payment of the special dividend on Oct. 8, LSB will have approximately 88.9 million shares outstanding, of which approximately 54.4 million shares, or approximately 61 percent, will be held by Eldridge.
“The closing of our exchange transaction with Eldridge represents a major step in LSB’s progress towards becoming a company that generates consistent growth in earnings and cash flow, and delivers increasing value to our stockholders,” said Mark Behrman, LSB’s President and CEO. “We are pleased that Eldridge has elected to partner with us to transform LSB’s balance sheet in order to give us the opportunity to unlock the company’s full potential as a leading producer and marketer of agricultural, industrial, and mining chemicals, and we look forward to having them as a sizeable holder of our common stock.”
LSB also announced on Sept. 29 that it priced its previously announced offering of $500 million in aggregate principal amount of senior secured notes due 2028, which will be sold in a private placement to eligible purchasers. The notes will be guaranteed on a senior secured basis by all of LSB’s existing subsidiaries and by certain of LSB’s future domestic wholly owned subsidiaries.
The notes will bear an annual rate of interest of 6.250 percent, will mature on Oct. 15, 2028, and will be issued at a price equal to 100 percent of their face value. The closing of this private offering is expected to occur on Oct. 14, 2021, subject to customary closing conditions.
LSB said it intends to use the net proceeds from this offering for the redemption, to pay related transaction fees, expenses, and premiums, and, to the extent of any remaining net proceeds, for general corporate purposes.