ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾

14. DEBT

ÌýÌýÌýÌýÌýÌýÌýÌýOutstanding debt of consolidated entities consisted of the following (dollars in millions):

ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation

ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International

DIRECT AND SUBSIDIARY DEBT

ÌýÌýÌýÌýÌýÌýÌýÌýÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation's direct debt and guarantee obligations consist of the following: guarantees of certain debt of HPS (our Chinese MDI joint venture); a guarantee of certain debt and other obligations of certain of our Australian subsidiaries; and certain indebtedness incurred from time to time to finance certain insurance premiums.

ÌýÌýÌýÌýÌýÌýÌýÌýSubstantially all of our other debt, including the facilities described below, has been incurred by our subsidiaries (primarily ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International); such subsidiary debt is nonrecourse to us and we have no contractual obligation to fund our subsidiaries' respective operations.

Senior Credit Facilities

ÌýÌýÌýÌýÌýÌýÌýÌýAs of DecemberÌý31, 2011, our Senior Credit Facilities consisted of our Revolving Facility, our Term Loan B, our Term Loan C and our Extended Term Loan B as follows (dollars in millions):

ÌýÌýÌýÌýÌýÌýÌýÌýOur obligations under the Senior Credit Facilities are guaranteed by our guarantor subsidiaries, which consist of substantially all of our domestic subsidiaries and certain of our foreign subsidiaries, and are secured by a first priority lien on substantially all of our domestic property, plant and equipment, the stock of all of our material domestic subsidiaries and certain foreign subsidiaries and pledges of intercompany notes between certain of our subsidiaries.

ÌýÌýÌýÌýÌýÌýÌýÌýOn MarchÌý7, 2011, ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International entered into a sixth amendment to its credit agreement. The amendment, among other things, extended $650Ìýmillion of aggregate principal of Term Loan B to a stated maturity of April 2017. As noted in the table above, after the amendment, as of DecemberÌý31, 2011, we have $652Ìýmillion outstanding on Term Loan B with maturity of April 2014 and $650Ìýmillion outstanding on Extended Term Loan B with a maturity of April 2017. The amendment increased the interest rate margin with respect to Extended Term Loan B by 1.0%. Extended Term Loan B will amortize in an amount equal to 1.0% of the principal amount, payable annually commencing on MarchÌý31, 2012. The amendment also grants ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International the right to request an extension of the remaining principal balance of Term Loan B to the stated maturity date of Extended Term Loan B.

ÌýÌýÌýÌýÌýÌýÌýÌýDuring 2010, we took the following actions with respect to our Senior Credit Facilities:

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  On MarchÌý9, ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International entered into the Fifth Amendment to the Credit Agreement which replaced certain agent banks, extended the stated maturity of the Revolving Facility and amended certain other terms.

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  On AprilÌý26, we prepaid $124Ìýmillion on Term Loan B and $40Ìýmillion on Term Loan C with cash accumulated in prior periods. We incurred a loss on early extinguishment of debt of $5 million.
  
  

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  On JuneÌý22, we prepaid $83Ìýmillion on Term Loan B and $27Ìýmillion on Term Loan C with proceeds from the final settlement of insurance claims. We incurred a loss on early extinguishment of debt of $2 million.
  
  

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  We paid the annual scheduled repayment of $16Ìýmillion on Term Loan B and $5 million on Term Loan C.

A/R Programs

ÌýÌýÌýÌýÌýÌýÌýÌýOur A/R Programs are structured so that we grant a participating undivided interest in certain of our trade receivables to the U.S. SPE and the EU SPE. We retain the servicing rights and a retained interest in the securitized receivables. Information regarding the A/R Programs was as follows (monetary amounts in millions):

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ÌýÌýÌýÌýÌýÌýÌýÌýOn AprilÌý15, 2011, ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International entered into an amendment to the EU A/R Program. This amendment, among other things, extended the scheduled commitment termination date of the program to April 2014, added an additional lender to the program and reduced the applicable margin on borrowings to 2.0%.

ÌýÌýÌýÌýÌýÌýÌýÌýOn AprilÌý18, 2011, ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International entered into an amendment to the U.S. A/R Program. This amendment, among other things, extended the scheduled commitment termination date of the program to April 2014, added an additional lender to the program and reduced the applicable margin on borrowings to a range of 1.50% to 1.65%.

ÌýÌýÌýÌýÌýÌýÌýÌýReceivables transferred under the A/R Programs qualified as sales through DecemberÌý31, 2009. Upon adoption of new accounting guidance in 2010, transfers of accounts receivable under our A/R Programs no longer met the criteria for derecognition. Accordingly, the amounts outstanding under our A/R Programs are accounted for as secured borrowings as of JanuaryÌý1, 2010. During 2009, we recorded a loss on the off-balance sheet accounts receivable securitization program of $23Ìýmillion.

ÌýÌýÌýÌýÌýÌýÌýÌýAs of DecemberÌý31, 2011 and DecemberÌý31, 2010, $633Ìýmillion and $552Ìýmillion respectively, of accounts receivable were pledged as collateral under the A/R Programs.

Notes

ÌýÌýÌýÌýÌýÌýÌýÌýAs of DecemberÌý31, 2011, we had outstanding the following notes (monetary amounts in millions):

ÌýÌýÌýÌýÌýÌýÌýÌýOur notes are governed by indentures which impose certain limitations on ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International, including among other things limitations on the incurrence of debt, distributions, certain restricted payments, asset sales, and affiliate transactions. The notes are unsecured obligations and are guaranteed by certain subsidiaries named as guarantors.

Redemption of Notes and Loss on Early Extinguishment of Debt

ÌýÌýÌýÌýÌýÌýÌýÌýDuring the years ended DecemberÌý31, 2011 and 2010, we redeemed or repurchased the following notes (monetary amounts in millions):

ÌýÌýÌýÌýÌýÌýÌýÌýFor the year ended DecemberÌý31, 2011, we and ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International recorded a loss on early extinguishment of debt of $7Ìýmillion. For the year ended DecemberÌý31, 2010, in connection with redemptions described in the table above, we recorded a loss on early extinguishment of debt of $176Ìýmillion, and ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International recorded a loss on early extinguishment of debt of $30Ìýmillion. As noted in "—Senior Credit Facilities" above, we and ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International also recognized a $7Ìýmillion loss on early extinguishment of debt in 2010 on the prepayment of $274Ìýmillion of Term Loans. For the year ended DecemberÌý31, 2009, we and ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International recorded a loss on early extinguishment of debt of $21Ìýmillion each.

Variable Interest Entity Debt

ÌýÌýÌýÌýÌýÌýÌýÌýOn AprilÌý1, 2011, we began consolidating Sasol-ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ which was previously accounted for under the equity method. See "NoteÌý7. Variable Interest Entities." Sasol-ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ has a facility agreement for a â‚�77Ìýmillion (approximately $100Ìýmillion) term loan facility and a â‚�5Ìýmillion (approximately $6Ìýmillion) revolving facility. As of DecemberÌý31, 2011, Sasol-ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ had no borrowings under the revolving facility and had â‚�73Ìýmillion (approximately $95Ìýmillion) outstanding under the term loan facility. The facility will be repaid over semiannual installments, with the final repayment scheduled for December 2018. Obligations under the facility agreement are secured by, among other things, first priority right on the property, plant and equipment of Sasol-ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾.

ÌýÌýÌýÌýÌýÌýÌýÌýAs of DecemberÌý31, 2011, Arabian Amines Company had $186Ìýmillion outstanding under its loan commitments and debt financing arrangements which consisted of the following:

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  An SIDF Facility with SAR 482Ìýmillion (approximately $129Ìýmillion) outstanding. Repayment of the loan is to be made in semiannual installments that are scheduled to begin in 2012, with final maturity in 2018. The loan is secured by a mortgage over the fixed assets of the project and is 100% guaranteed by the Zamil Group, our 50% joint venture partner.
  
  

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  A multipurpose Islamic term facility with $57Ìýmillion outstanding. This facility is scheduled to be repaid in semiannual installments, with final maturity in 2022.

Other Debt

ÌýÌýÌýÌýÌýÌýÌýÌýDuring the year ended DecemberÌý31, 2011, HPS repaid $4Ìýmillion and RMB 151Ìýmillion (approximately $24Ìýmillion) of term loans and working capital loans under its secured facilities. In addition, during the year ended DecemberÌý31, 2011, HPS refinanced RMB 38Ìýmillion (approximately $6Ìýmillion) in working capital loans and borrowed an additional RMB 145Ìýmillion (approximately $23Ìýmillion) in working capital loans with maturity in 2014. The interest rate on these facilities is LIBOR plus 0.48% for U.S. dollar borrowings and approximately 90% of the Peoples Bank of China rate for RMB borrowings. As of DecemberÌý31, 2011, HPS had $12Ìýmillion and RMB 474Ìýmillion (approximately $75Ìýmillion) term loan and working capital borrowings under these secured facilities. As of DecemberÌý31, 2011, the interest rate was approximately 1% for U.S. dollar borrowings and 6% for RMB borrowings. We have guaranteed certain of these loans.

ÌýÌýÌýÌýÌýÌýÌýÌýAs of DecemberÌý31, 2011, HPS also had RMB 499Ìýmillion (approximately $79Ìýmillion) outstanding under a loan facility for working capital loans and discounting commercial drafts with recourse, which is classified as current portion of debt on the accompanying consolidated balance sheets. Interest is calculated using a Peoples Bank of China rate plus the applicable margin. The all-in rate as of DecemberÌý31, 2011 was approximately 6%.

ÌýÌýÌýÌýÌýÌýÌýÌýAs of DecemberÌý31, 2011, our Australian subsidiary has A$26Ìýmillion (approximately $26Ìýmillion) outstanding under its credit facility. The credit facility is comprised of a revolving facility with A$14Ìýmillion (approximately $14Ìýmillion) outstanding and a term facility with A$12Ìýmillion (approximately $12Ìýmillion) outstanding. On SeptemberÌý1, 2011, our Australian subsidiary entered into an amendment with the lender to modify certain terms of the credit facility.

ÌýÌýÌýÌýÌýÌýÌýÌýDuring the third quarter of 2011, we incurred other debt related to the financing of our insurance premiums in connection with our annual renewal in July 2011. As of DecemberÌý31, 2011, the outstanding amount of financed insurance premiums was $15Ìýmillion, all of which was classified as current portion of debt on the accompanying consolidated balance sheets.

Note Payable from ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International to ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation

ÌýÌýÌýÌýÌýÌýÌýÌýAs of DecemberÌý31, 2011, we had a loan of $535Ìýmillion to our subsidiary, ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International. The Intercompany Note is unsecured and $100Ìýmillion of the outstanding amount is classified as current as of DecemberÌý31, 2011 on the accompanying consolidated balance sheets. As of DecemberÌý31, 2011, under the terms of the Intercompany Note, ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International promises to pay us interest on the unpaid principal amount at a rate per annum based on the previous monthly average borrowing rate obtained under our U.S. A/R Program, less 10 basis points (provided that the rate shall not exceed an amount that is 25 basis points less than the monthly average borrowing rate obtained for the U.S. LIBOR-based borrowings under our Revolving Facility).

COMPLIANCE WITH COVENANTS

ÌýÌýÌýÌýÌýÌýÌýÌýWe believe that we are in compliance with the covenants contained in the agreements governing our material debt instruments, including our Senior Credit Facilities, our A/R Programs and our notes.

ÌýÌýÌýÌýÌýÌýÌýÌýOur material financing arrangements contain certain covenants with which we must comply. A failure to comply with a covenant could result in a default under a financing arrangement if not waived or amended. A default under these material financing arrangements generally allows debt holders the option to declare the underlying debt obligations immediately due and payable.

ÌýÌýÌýÌýÌýÌýÌýÌýFurthermore, certain of our material financing arrangements contain cross default and cross acceleration provisions under which a failure to comply with the covenants in one financing arrangement may result in an event of default under another financing arrangement.

ÌýÌýÌýÌýÌýÌýÌýÌýOur Senior Credit Facilities are subject to the Leverage Covenant which applies only to the Revolving Facility and is tested at the ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International level. The Leverage Covenant is applicable only if borrowings, letters of credit or guarantees are outstanding under the Revolving Facility (cash collateralized letters of credit or guarantees are not deemed outstanding). The Leverage Covenant is a net senior secured leverage ratio covenant which requires that ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International's ratio of senior secured debt to EBITDA (as defined in the applicable agreement) is not more than 3.75 to 1.

ÌýÌýÌýÌýÌýÌýÌýÌýIf in the future ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International failed to comply with the Leverage Covenant, then we may not have access to liquidity under our Revolving Facility. If ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International failed to comply with the Leverage Covenant at a time when we had uncollateralized loans or letters of credit outstanding under the Revolving Facility, ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International would be in default under the Senior Credit Facilities, and, unless ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International obtained a waiver or forbearance with respect to such default (as to which we can provide no assurance), ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International could be required to pay off the balance of the Senior Credit Facilities in full, and we may not have further access to such facilities.

ÌýÌýÌýÌýÌýÌýÌýÌýThe agreements governing our A/R Programs also contain certain receivable performance metrics. Any material failure to meet the applicable A/R Programs' metrics in the future could lead to an early termination event under the A/R Programs, which could require us to cease our use of such facilities, prohibiting us from additional borrowings against our receivables or, at the discretion of the lenders, requiring that we repay the A/R Programs in full. An early termination event under the A/R Programs would also constitute an event of default under our Senior Credit Facilities, which could require us to pay off the balance of the Senior Credit Facilities in full and could result in the loss of our Senior Credit Facilities.

MATURITIES

ÌýÌýÌýÌýÌýÌýÌýÌýThe scheduled maturities of our debt (excluding debt to affiliates) by year as of DecemberÌý31, 2011 are as follows (dollars in millions):