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Item 2.03
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Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance
Sheet Arrangement of a Registrant.
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Sale of Additional Senior Secured
Notes due 2023
On June 21, 2019, LSB Industries, Inc. (the “Company”) completed its previously announced issuance and sale of
$35 million aggregate principal amount of its 9.625% Senior Secured Notes due 2023 (the “New Notes”). The New Notes constitute a further issuance of the 9.625% Senior Secured Notes due 2023, of which $400 million aggregate
principal amount was issued on April 25, 2018 (such previously issued notes together with the New Notes, the “Notes”). The New Notes were issued pursuant to an indenture, dated as of April 25, 2018 (the “Indenture”), by
and among the Company, the subsidiary guarantors named therein, and Wilmington Trust, National Association, a national banking association, as trustee and collateral agent (the “Notes Trustee”). The New Notes were issued at a price equal
to 102.125% of their face value, plus accrued interest from May 1, 2019 to June 21, 2019, in a transaction exempt from the registration requirements under the Securities Act of 1933 (the “Securities Act”) and will be resold to
eligible purchasers in reliance on Rule 144A under the Securities Act and to
non-U.S.
persons in accordance with Regulation S under the Securities Act. The Notes will mature on May 1, 2023 and rank senior
in right of payment to all of the Company’s debt that is expressly subordinated in right of payment to the Notes, and will rank pari passu in right of payment with all of the Company’s liabilities that are not so subordinated, including
the Company’s revolving credit facility. The Company’s obligations under the Notes are jointly and severally guaranteed by the subsidiary guarantors named in the Indenture on a senior secured basis.
Interest on the Notes accrues at a rate of 9.625% per annum and is payable semi-annually in arrears on May 1 and November 1 of each year to the
holders of record on the immediately preceding April 15 and October 15. Interest on the New Notes accrues from May 1, 2019.
The Indenture
provides for customary events of default (subject in certain cases to customary grace and cure periods), which include nonpayment, breach of covenants in the Indenture, payment defaults or acceleration of other indebtedness, a failure to pay certain
judgments and certain events of bankruptcy and insolvency. Generally, if an event of default occurs and is continuing, the Notes Trustee or holders of at least 25% in principal amount of the then outstanding Notes may declare the principal of and
accrued but unpaid interest on all the Notes to be due and payable.
The foregoing description of the Indenture is not intended to be complete and is
qualified in its entirety by reference to the complete text of the Indenture (including the forms of the Notes and the form of Guarantee Agreement included therein), which is incorporated herein by reference.
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