Celanese Corporation (NYSE:CE) Files An 8-K Entry into a Material Definitive Agreement

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Celanese Corporation (NYSE:CE) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01

Entry into a Material Definitive Agreement.
Transaction Agreement
On June 18, 2017, Celanese Corporation, a Delaware corporation
(the Company), through its subsidiaries, agreed with certain
affiliates of The Blackstone Group L.P. to form a joint venture
(the Joint Venture) which combines the Companys cellulose
derivatives business (the Celanese CD Business) and the Rhodia
Acetow cellulose acetate business (the Acetow Business) formerly
operated by Solvay S.A. and recently acquired by the Blackstone
Entities (as defined below). The joint venture transaction (the
Transaction) is subject to the terms and conditions of a
Transaction Agreement (as defined below).
At the closing (the Closing), Celanese (as defined below) will
cause the Celanese CD Business to be transferred to the Joint
Venture in exchange for 70% of ownership interests in the Joint
Venture, and the Blackstone Entities will cause the Acetow Business
to be transferred to the Joint Venture (subject, solely with
respect to the French business, to the completion of a French works
council consultation process), in exchange for 30% of ownership
interests in the Joint Venture (with such ownership percentages
subject to adjustments to the Transaction Agreement based on the
value of contributed assets and liabilities). Until the Closing,
the Celanese CD Business and the Acetow Business will continue to
operate wholly independently of each other.
The Transaction Agreement includes customary representations,
warranties, and covenants by the parties, including representations
and warranties by Celanese regarding the Celanese CD Business and
the Blackstone Entities regarding the Acetow Business. The
representations and warranties have been made solely for the
benefit of the parties. The consummation of the Transaction is
subject to customary closing conditions, including: (i) waiting
periods, clearances and/or approvals of the European Union and
other jurisdictions requiring antitrust or similar approvals shall
have expired, been terminated or be obtained (as applicable), and
(ii) completion of the internal reorganizations of the Celanese CD
Business and the Acetow Business to facilitate the Closing and
operation of the Joint Venture post-closing.
The Transaction Agreement may be terminated by Celanese and/or the
Blackstone Entities under certain limited circumstances, including
if the Closing is not consummated within one year of signing, which
date may be extended by an additional 90 days, under certain
circumstances. Upon the consummation of the Transaction, the
parties and certain affiliates will enter into governance
agreements that will contain restrictions on the transfer of the
respective direct and indirect interests in the Partnerships (as
defined below) and provisions relating to the management of the
Joint Venture, tagalong rights, drag-along rights, preemptive
rights, rights of first offer and certain exit rights.
In connection with the transactions contemplated by the Transaction
Agreement, the Partnerships entered into commitment letters, each
dated as of June 18, 2017, with Barclays Bank PLC, Credit Suisse
AG, Deutsche Bank AG and certain of their respective affiliates to
which the Joint Venture obtained commitments for credit facilities
consisting of (i) senior secured and senior unsecured revolving
credit facilities in an aggregate principal amount of $200 million,
(ii) senior secured term loan facilities in an aggregate principal
amount of $1,005 million, (iii) a senior unsecured bridge facility
in an aggregate principal amount of $800 million, which bridge
facility will backstop the proposed issuance of $800 million senior
unsecured notes by a Joint Venture subsidiary on or prior to the
Closing, and (iv) a senior unsecured term loan facility in an
aggregate principal amount of $400 million. The credit facilities
will be guaranteed by certain of the subsidiaries of the respective
borrowers. Only the $65 million senior unsecured portion of the
$200 million revolving credit facilities and the $400 million
senior unsecured term loan credit facility will be guaranteed by
the Company. The revolving credit facilities will also be available
for ongoing working capital and other general corporate purposes of
the applicable borrower and certain of its subsidiaries following
completion of the Transaction. The proceeds of the debt financing
are expected to be used to repay certain of the parties existing
indebtedness including the short-term credit facility described
below.
In addition, in connection with certain internal reorganizations
contemplated by the Transaction Agreement, Celanese entered into a
commitment letter dated as of June 18, 2017 with Barclays Bank PLC,
to which Barclays Bank PLC will provide a short-term credit
facility to be incurred by the entities owning the Celanese CD
Business before Closing, the proceeds of which will be used to
finance certain distributions by such entities to the Company
before Closing. Upon consummation of the Transaction, the
borrowings under such short-term facility will be repaid in full
with the proceeds of debt financing received by the Joint Venture
as described above.
The debt commitment letters referenced above contain conditions to
funding of the debt financing customary for commitments of its
type. Various economic terms of the debt financing are subject to
change in the process of syndication.
The distributions which will be allocated to each of the
respective parties at Closing are subject to adjustments based on
the respective amounts of net working capital (relative to a
target), capital spending (between signing and the Closing
relative to a target), cash, debt and certain debt-like items of
the Celanese CD Business and the Acetow Business. In addition,
distributions are subject to adjustments based on an agreed upon
allocation of transaction expenses and financing fees, as well as
an appropriate level of cash to be retained at the Partnerships.
At the Closing, the parties will also enter into various
ancillary agreements, including, without limitation:

an amended and restated partnership agreement for each
of the Partnerships, together with amended and restated
operating agreements of the general partners of the
Partnerships;
a transition services agreement, to which the Company
and its subsidiaries will provide certain transition
services to the Joint Venture;
supply agreements, to which (a) subsidiaries of the
Company will provide acetic acid, acetic anhydride,
and ultra-high molecular weight polyethylene to the
Joint Venture, and (b) the Joint Venture will provide
acetate flake to subsidiaries of the Company to
support its Clarifoil business;
an intellectual property licensing agreement, to which
a subsidiary of Celanese will license certain
intellectual property to the Joint Venture; and
a framework agreement with respect to the ownership
interests in, and operation of, the Joint Venture.
In connection with the proposed Joint Venture, on June 18, 2017,
Celanese US Holdings LLC, a limited liability company and
subsidiary of the Company (Celanese), entered into a Transaction
Agreement (the Transaction Agreement) by and among Celanese, BCP
VII Jade Cayman Aggregator Ltd., a limited liability company
(Swordfish 1), BCP VII Swordfish Aggregator L.P., a limited
partnership (Swordfish 2 and, together with Swordfish 1, the
Blackstone Entities), Acetate UTP C.V., a limited partnership
(P1), and Lower Tier Partnership Netherlands C.V., a limited
partnership and a subsidiary of the Company (P2 and, together
with P1, the Partnerships). The Joint Venture structure will
consist of one partnership to hold the primarily U.S. assets of
the combined business and one partnership to hold the remaining
assets of the combined business.
The foregoing summary of the Transaction Agreement does not
purport to be a complete description and is qualified in its
entirety by reference to the terms and conditions of the
Transaction Agreement, a copy of which will be filed as an
exhibit to a future periodic report of the Company.
Item 7.01
Regulation FD Disclosure.
On June 19, 2017, Mark C. Rohr, Chairman and Chief Executive
Officer, Scott M. Sutton, Chief Operating Officer, and
Christopher W. Jensen, Executive Vice President and Chief
Financial Officer, of the Company, will make a presentation to
investors and analysts concerning the Transaction via a webcast
hosted by the Company at 8:30 a.m. ET (7:30 a.m. CT). The
webcast, press release, prepared remarks from Mark Rohr and a
slide presentation may be accessed on our website at
www.celanese.com under Investor Events Presentations. A copy of
the press release, the prepared remarks and the slide
presentation posted for the webcast are attached to this
Current Report as Exhibit 99.1, Exhibit 99.2 and Exhibit 99.3,
respectively, and are incorporated herein solely for purposes
of this Item 7.01 disclosure. During the webcast management may
make, and the attached slide presentation and management’s
prepared remarks contain, references to certain Non-US GAAP
financial measures. Non-US GAAP financial measures appearing in
the slide presentation and management’s prepared remarks are
accompanied by the most directly comparable US GAAP financial
measure. In addition, those Non-US GAAP financial measures are
defined and reconciled to the most comparable US GAAP financial
measure in our Current Non-US GAAP Financial Measures and
Supplemental Information and Historical Non-US GAAP Financial
Measures and Supplemental Information documents filed with this
Current Report as Exhibit 99.4 and Exhibit 99.5 (and available
on our website) and is incorporated herein solely for purpose
of this Item 7.01 disclosure.*
Item 9.01
Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No.
Description
99.1
Press Release issued by the Company on June 18,
2017.*
99.2
Prepared Remarks issued by the Company on June 18,
2017.*
99.3
Presentation issued by the Company on June 18,
2017.*
99.4
Current Non-US GAAP Financial Measures and
Supplemental Information dated June 18, 2017.*
99.5
Historical Non-US GAAP Financial Measures and
Supplemental Information dated June 18, 2017.*
Filed herewith.
* In connection with the disclosure set forth in Item 7.01, the
information in Item 7.01 of this Current Report, including the
exhibits attached hereto and incorporated by reference, is
being furnished and shall not be deemed “filed” for purposes
of Section 18 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), or otherwise subject to the
liabilities of such section. The information in Item 7.01 of
this Current Report, including the exhibits, shall not be
incorporated by reference into any filing under the Securities
Act of 1933, as amended, or the Exchange Act, regardless of any
incorporation by reference language in any such filing. This
Current Report will not be deemed an admission as to the
materiality of any information in this Current Report that is
required to be disclosed solely by Regulation FD.


About Celanese Corporation (NYSE:CE)

Celanese Corporation (Celanese) is a technology and specialty materials company. The Company operates through four segments: Advanced Engineered Materials, Consumer Specialties, Industrial Specialties and Acetyl Intermediates. Its business involves processing chemical raw materials, such as methanol, carbon monoxide, ethylene and natural products, including wood pulp, into chemicals, thermoplastic polymers and other chemical-based products. It engineers and manufactures a range of products, which serves a range of end-use applications, including paints and coatings, textiles, automotive applications, consumer and medical applications, performance industrial applications, filtration applications, paper and packaging, chemical additives, construction, consumer and industrial adhesives, and food and beverage applications. The Company operates in North America, Europe and Asia and consists of approximately 20 global production facilities.

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