Huntsman pays down $1.2 billion of debt in Q3, aims for high grade

By Devika Patel

Knoxville, Tenn., Oct. 27 – Huntsman Corp. paid down more than $1.2 billion of debt in the third quarter and management said that the company’s balance sheet is “the strongest” it has ever been.

The company aims to become investment grade in 2018 and will continue paying down its debt until this objective is reached.

“I believe that this is the strongest Huntsman’s balance sheet has ever been,” executive vice president and chief financial officer Sean Douglas said on the company’s third quarter earnings conference call on Friday.

“We transformed our balance sheet with the paydown of over $1.2 billion of debt in the quarter due to the proceeds we received from our successful IPO of Venator,” Douglas said.

On Oct. 27, Huntsman made a $100 million early repayment on its term loan.

Year to date, the company has repaid about $1.6 billion of debt.

“Just this week, we paid down an additional $100 million of our term loan B from free cash flow.

“We still own 75.4% of the equity of Venator and intend to use the proceeds of future secondary offerings to further deleverage our balance sheet,” Douglas said.

The purpose of paying down debt so quickly is to reach investment-grade status in 2018.

“We remain focused on strengthening our balance sheet and our objective is soon to become investment-grade,” Douglas said.

“We will hit investment-grade metrics beginning in 2018,” president and chief executive officer Peter Huntsman said on the call.

At the end of the third quarter, the company’s net debt to adjusted EBITDA was 2.2x, compared to 3.7x a year ago.

“I would expect our debt ratio to EBITDA to further improve between now and the end of the year,” Huntsman said on the call.

“This will continue to be a priority in 2018.

“I believe we may well end 2017 close to 2x net debt to EBITDA,” Huntsman said.

During the quarter Huntsman generated adjusted free cash flow of $227 million, compared to $251 million a year ago.

“Free cash flow generation remained a high priority for Huntsman,” Douglas said on the call.

Adjusted EBITDA was $340 million in the third quarter, compared to $234 million in the prior year period and $299 million in the second quarter.

As of Sept. 30, the company had $1,211,000,000 of combined cash and unused borrowing capacity compared to $1,208,000,000 as of Dec. 31, 2016.

Huntsman is a specialty chemicals manufacturer based in the Woodlands, Texas.

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