Item 1.01 Entry into a Material Definitive Agreement.
Exchange Agreement and Issuance of
Series E-1
Preferred Stock and
Series F-1
Preferred Stock
As previously announced and in connection with its notes refinancing
transactions completed on April 25, 2018 (the Refinancing Transactions), LSB Industries, Inc. (the Company) entered into a letter agreement (the Letter Agreement) with LSB Funding LLC
(LSB Funding), an unrelated third party and the holder of our Series E cumulative redeemable Class C preferred stock (Series E Redeemable Preferred), to extend the date upon which a holder of
Series E Redeemable Preferred has the right to elect to have such holders shares of Series E Redeemable Preferred redeemed by the Company from August 2, 2019 to October 25, 2023. The Letter Agreement, which was filed as
Exhibit 10.1 to the Companys Current Report on
Form 8-K
filed with the Securities and Exchange Commission (the SEC) on May 1, 2018, also provided for the adjustment of certain
other terms relating to the Series E Redeemable Preferred, including an increase in the per annum dividend rate payable in respect of the Series E Redeemable Preferred (a) by 0.50% on the third anniversary of the Refinancing
Transactions, (b) by an additional 0.50% on the fourth anniversary of the Refinancing Transactions and (c) by an additional 1.0% on the fifth anniversary of the Refinancing Transactions.
In furtherance of the Letter Agreement and as expressly contemplated by Section 3 and Section 5(a) therein, the Company and LSB Funding entered into
a Securities Exchange Agreement on October 18, 2018 (the Exchange Agreement) providing for the exchange of (i) existing Series E Redeemable Preferred held by LSB Funding for shares of newly created
Series E-1
cumulative redeemable Class C preferred stock of the Company
(Series E-1
Redeemable Preferred) and (ii) existing Series F
redeemable Class C preferred stock of the Company (Series F Redeemable Preferred) held by LSB Funding for a share of newly created
Series F-1
redeemable Class C preferred
stock of the Company
(Series F-1
Redeemable Preferred), in each case on a one
share-for-one
share basis (the
Preferred Exchange).
On October 18, 2018, the Company and LSB Funding completed the Preferred Exchange. Pursuant thereto, LSB
Funding (i) surrendered all of its shares of Series E Redeemable Preferred and was issued 139,768 shares of
Series E-1
Redeemable Preferred and (ii) surrendered its one share of
Series F Redeemable Preferred and was issued one share of
Series F-1
Redeemable Preferred.
Apart from
implementing the adjustments contemplated by the Letter Agreement, which will increase the per annum dividend rate payable on the preferred stock in future years as described above, the terms of the
Series E-1
Redeemable Preferred and
Series F-1
Redeemable Preferred are substantively identical to the terms of the
now-retired
Series E Redeemable Preferred and Series F Redeemable Preferred, respectively. The per annum dividend rate on the
Series E-1
Redeemable
Preferred at issuance is 14.0% per annum.
The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the full
texts of (i) the Exchange Agreement, a copy of which is filed as Exhibit 10.1 hereto and incorporated by reference herein; (ii) the Certificate of Designations setting forth the rights, preferences, privileges and restrictions
applicable to the
Series E-1
Redeemable Preferred, as filed with the Secretary of State of the State of Delaware (the
Series E-1
Certificate of
Designations), a copy of which is filed as Exhibit 4.1 hereto and incorporated by reference herein; and (iii) the Certificate of Designations setting forth the rights, preferences, privileges and restrictions applicable to the
Series F-1
Redeemable Preferred, as filed with the Secretary of State of the State of Delaware (the
Series F-1
Certificate of Designations), a copy of
which is filed as Exhibit 4.2 hereto and incorporated by reference herein.
Amendment to Registration Rights Agreement
The Company and LSB Funding previously entered into a Registration Rights Agreement, dated as of December 4, 2015 (as previously amended, the
Registration Rights Agreement), a copy of which was filed as Exhibit 10.4 to the Companys Current Report on
Form 8-K
filed with the SEC on December 8, 2015. The Exchange
Agreement amends the Registration Rights Agreement in part (the Registration Rights Amendment) by replacing the references therein to the Series E Redeemable Preferred with references to the
Series E-1
Redeemable Preferred.
The foregoing description of the Registration Rights Amendment does not
purport to be complete and is qualified in its entirety by reference to the full text of the Registration Rights Amendment, a copy of which is contained in the Exchange Agreement filed as Exhibit 10.1 hereto and incorporated by reference
herein.
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