Chemtura Wins Approval for $1 Billion Agreement to Finance Bankruptcy Exit

Chemtura Corp. won court permission to enter an agreement to finance the plastic-additives maker’s exit from bankruptcy with about $1 billion in new debt.

U.S. Bankruptcy Judge Robert Gerber in Manhattan today said Chemtura can borrow $275 million in a revolving credit facility and as much as $750 million through an unsecured term loan or notes. Gerber also allowed Chemtura’s Canadian unit to join the parent company’s U.S. bankruptcy case.

Chemtura, based in Middlebury, Connecticut, said July 30 that it seeks to prefund new debt as it prepares to leave bankruptcy. The financing will cost $23.1 million to $34.3 million, and breakup fees may reach $32.5 million if some conditions aren’t satisfied, the company said.

The agent for the loan is Bank of America Corp., with joint lead arrangers Banc of America Securities LLC and Wells Fargo Capital Finance LLC. Chemtura will seek final approval for the financing when it confirms a Chapter 11 plan.

Chemtura Canada, which filed for bankruptcy yesterday, was included in the reorganization plan filed by the parent in July. The unit’s bankruptcy will allow Chemtura to resolve liability from diacetyl, a chemical used to add butter flavor to products including microwave popcorn, the parent said in the so-called disclosure statement explaining its plan.

The case is In re Chemtura Corp., 09-11233, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Tiffany Kary in New York at tkary@bloomberg.net.

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