HOUSTON, May 24, 2018 /PRNewswire/ — Kraton Corporation (NYSE: KRA) (the “Company”) today announced that it has completed its previously announced refinancing transactions that extend the maturity and lower interest expense on a portion of the outstanding indebtedness of Kraton Polymers LLC (“Kraton LLC”) and Kraton Polymers Capital Corporation, the Company’s wholly-owned subsidiaries (together, the “Issuers”). the refinancing transactions included:

• the offering by the Issuers of ‚¬290.0 million in aggregate principal amount of 5.25% senior notes due 2026 (the “New Notes”);
• borrowings by Kraton LLC of $90.0 million in incremental U.S. dollar denominated term loans (the “Incremental Term Loans”) under the Company’s existing senior secured term loan facility; and
• the previously announced tender offer (the “Tender Offer”) for any and all of the Issuers’ outstanding 10.500% senior notes due 2023 (the “10.5% Notes”).

“Since the closing of the Arizona Chemical acquisition in January of 2016 we have been committed to reducing our consolidated net debt leverage ratio, while taking appropriate steps to improve our capital structure and reduce interest expense. the successful refinancing of our 10.5% notes is consistent with these objectives, and it provides for an expected reduction in annual cash interest expense of nearly $24 million,” said Stephen E. Tremblay, Kraton’s Executive Vice President and Chief Financial Officer. “In addition, the issuance of Euro-denominated senior notes will allow for a more efficient application of cash generated offshore to future debt service obligations,” said Tremblay. “Although we incurred a call premium and transaction fees that resulted in a modest increase in our consolidated net debt leverage ratio, we still anticipate ending 2018 with a consolidated net debt leverage ratio below four turns,” Tremblay added.

In connection with the Tender Offer, the Issuers accepted for purchase $157,591,000 aggregate principal amount of 10.5% Notes (including $100,000 aggregate principal amount of 10.5% Notes that were tendered in accordance with the guaranteed delivery procedures). the completion of the refinancing transactions today also satisfies the conditions precedent to the previously announced redemption of the remaining 10.5% Notes on June 13, 2018 (the “Redemption”).

The net proceeds from the offering of the New Notes and the borrowings of the Incremental Term Loans, together with borrowings under the Company’s existing asset-based revolving credit facility and cash on hand, are being used to fund the consideration and redemption price plus, in each case, accrued and unpaid interest for the Tender Offer and Redemption, respectively.

This press release does not constitute a notice of redemption under the optional redemption provisions of the indenture governing the 10.5% Notes.