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 a guarantee of certain indebtedness incurred from time to time to finance certain insurance premiums. Substantially all of our other debt, including the facilities described below, has been incurred by our subsidiaries (primarily ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International); ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ Corporation is not a guarantor of such subsidiary debt.

ÌýÌýÌýÌýÌýÌýÌýÌýCertain of our subsidiaries are designated as nonguarantor subsidiaries and have third-party debt agreements. These debt agreements contain certain restrictions with regard to dividends, distributions, loans or advances. In certain circumstances, the consent of a third party would be required prior to the transfer of any cash or assets from these subsidiaries to us.

Senior Credit Facilities

ÌýÌýÌýÌýÌýÌýÌýÌýAs of DecemberÌý31, 2012, our Senior Credit Facilities consisted of our Revolving Facility, our Term Loan B, our Extended Term Loan B, our Extended Term Loan B—SeriesÌý2, and our Term Loan C as follows (dollars in millions):

ÌýÌýÌýÌýÌýÌýÌýÌýOur obligations under the Senior Credit Facilities are guaranteed by our guarantors, 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.

ÌýÌýÌýÌýÌýÌýÌýÌýDuring the year ended DecemberÌý31, 2012, we made the following payments on our Senior Credit Facilities:

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  On OctoberÌý31, 2012, we prepaid $50Ìýmillion on our Term Loan B.
  
  

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  On SeptemberÌý24, 2012, we prepaid $58Ìýmillion on our Term Loan B.
  
  

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  On SeptemberÌý7, 2012, we prepaid $3Ìýmillion on our Term Loan B, $6Ìýmillion on our Extended Term Loan B, $4Ìýmillion on our Extended Term Loan B—SeriesÌý2 and $4Ìýmillion on our Term Loan C.

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  On AprilÌý2, 2012, we paid the annual scheduled repayment of $3Ìýmillion on our Term Loan B, $7Ìýmillion on our Extended Term Loan B and $4Ìýmillion on our Term Loan C.

ÌýÌýÌýÌýÌýÌýÌýÌýIn connection with these debt repayments, we recognized a loss on early extinguishment of debt of approximately $2Ìýmillion during the year ended DecemberÌý31, 2012.

Amendment to Credit Agreement

ÌýÌýÌýÌýÌýÌýÌýÌýOn MarchÌý6, 2012, ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International entered into a seventh amendment to the Senior Credit Facilities. Among other things, the amendment:

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  extended the stated termination date of the Revolving Facility commitments from MarchÌý9, 2014 to MarchÌý20, 2017;
  
  

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  reduced the applicable interest rate margin on the Revolving Facility commitments by 0.50%;
  
  

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  set the undrawn commitment fee on the Revolving Facility at 0.50%;
  
  

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  increased the capacity for the Revolving Facility commitments from $300Ìýmillion to $400Ìýmillion;
  
  

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  extended the stated maturity date of $346Ìýmillion aggregate principal amount of Term Loan B from AprilÌý19, 2014 to AprilÌý19, 2017 (now referred to as Extended Term Loan B—SeriesÌý2);
  
  

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  increased the interest rate margin with respect to Extended Term Loan B—SeriesÌý2 to LIBOR plus 3.00% (the interest rate margin is subject to a leverage-based step-down, which has been achieved based upon our recent results); and
  
  

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  set the amortization on the Extended Term Loan B—SeriesÌý2 at 1% of the principal amount.

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 (now referred to as Extended Term Loan B)Ìýand increased the interest rate on the Extended Term Loan B to LIBOR plus 2.50%.

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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ÌýÌýÌýÌýÌýÌýÌýÌýAs of DecemberÌý31, 2012 and DecemberÌý31, 2011, $520Ìýmillion and $633Ìýmillion, respectively, of accounts receivable were pledged as collateral under the A/R Programs.

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%.

Notes

ÌýÌýÌýÌýÌýÌýÌýÌýAs of DecemberÌý31, 2012, 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.

ÌýÌýÌýÌýÌýÌýÌýÌýOn NovemberÌý19, 2012, ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International completed a $400Ìýmillion offering of the 2020 Senior Notes. We used the net proceeds to redeem a portion of the 2016 Senior Notes. See "—Redemption of Notes and Loss on Early Extinguishment of Debt."

ÌýÌýÌýÌýÌýÌýÌýÌýThe 2020 Senior Notes bear interest at the rate of 4.875% per year payable semi-annually on MayÌý15 and NovemberÌý15 of each year, beginning on MayÌý15, 2013 and are due on NovemberÌý15, 2020. ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International may redeem the 2020 Senior Notes in whole or in part at any time prior to AugustÌý17, 2020 at a price equal to 100% of the principal amount thereof plus a "make-whole" premium and accrued and unpaid interest. ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International may redeem the 2020 Senior Notes in whole or in part on or after AugustÌý17, 2020 at a price equal to 100% of the principal amount thereof plus accrued and unpaid interest.

ÌýÌýÌýÌýÌýÌýÌýÌýThe 2020 Senior Notes are general unsecured senior obligations of ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International and are guaranteed on a general unsecured senior basis by the Guarantors. The indenture with respect to the 2020 Senior Notes imposes certain limitations on the ability of ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International and its subsidiaries to, among other things, incur additional indebtedness secured by any principal properties, incur indebtedness of nonguarantor subsidiaries, enter into sale and leaseback transactions with respect to any principal properties and consolidate or merge with or into any other person or lease, sell or transfer all or substantially all of its properties and assets. Upon the occurrence of certain change of control events, holders of the 2020 Senior Notes will have the right to require that ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ International purchase all or a portion of such holder's 2020 Senior Notes in cash at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase.

Redemption of Notes and Loss on Early Extinguishment of Debt

ÌýÌýÌýÌýÌýÌýÌýÌýDuring the years ended DecemberÌý31, 2012 and 2011, we redeemed or repurchased the following notes (monetary amounts in millions):

Variable Interest Entity Debt

ÌýÌýÌýÌýÌýÌýÌýÌýAs of DecemberÌý31, 2012, Arabian Amines Company had $180Ìýmillion outstanding under its loan commitments and debt financing arrangements described below. Arabian Amines Company, our consolidated 50%-owned joint venture, is currently not in compliance with certain financial covenants contained under these loan commitments. We do not guaranty these loan commitments and Arabian Amines Company is not a guarantor of any of our other debt obligations, and the noncompliance with these financial covenants does not affect any of our other debt obligations. Arabian Amines Company is currently in discussions with the lenders under these loan commitments and expects to resolve the noncompliance. The amounts outstanding under these loan commitments were classified as current on the accompanying consolidated balance sheets as of DecemberÌý31, 2012.

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  A loan facility from Saudi Industrial Development Fund with SAR 472Ìýmillion (approximately $126Ìýmillion) outstanding. Repayment of the loan is to be made in semiannual installments that began in 2012, with final maturity in 2019. 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 $54Ìýmillion outstanding. This facility is scheduled to be repaid in semiannual installments that began in 2011, with final maturity in 2022.

ÌýÌýÌýÌýÌýÌýÌýÌýAs of DecemberÌý31, 2012, Sasol-ÀÖÌìÌÃfun88(ÖйúÇø)¹Ù·½ÍøÕ¾ had a facility agreement which included a â‚�5Ìýmillion (approximately $6Ìýmillion) revolving facility and â‚�68Ìýmillion (approximately $90Ìýmillion) outstanding under the term loan facility. The facility will be repaid over semiannual installments that began in 2011, 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

Other Debt

ÌýÌýÌýÌýÌýÌýÌýÌýDuring the year ended DecemberÌý31, 2012, HPS repaid $4Ìýmillion and RMB 120Ìýmillion (approximately $19Ìýmillion) on term loans and working capital loans under its secured facilities. As of DecemberÌý31, 2012, HPS had $8Ìýmillion and RMB 354Ìýmillion (approximately $56Ìýmillion) outstanding under its secured facilities. 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, 2012, the interest rate was approximately 1% for the U.S. dollar borrowings and approximately 6% for RMB borrowings. During 2012, the lenders released our Company as a guarantor.

ÌýÌýÌýÌýÌýÌýÌýÌýDuring the year ended DecemberÌý31, 2012, HPS repaid RMB 309Ìýmillion (approximately $50Ìýmillion) under its loan facility for working capital loans and discounting of commercial drafts. As of DecemberÌý31, 2012, HPS had RMB 190Ìýmillion (approximately $30Ìýmillion) outstanding, 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 average all-in rate as of DecemberÌý31, 2012 was approximately 6%.

ÌýÌýÌýÌýÌýÌýÌýÌýOn MarchÌý30, 2012, we repaid the remaining A$26Ìýmillion (approximately $27Ìýmillion) outstanding under our Australian Credit Facility, which represents repayment of A$14Ìýmillion (approximately $15Ìýmillion) under the revolving facility and A$12Ìýmillion (approximately $12Ìýmillion) under the term loan facility.

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

ÌýÌýÌýÌýÌýÌýÌýÌýAs of DecemberÌý31, 2012, we had a loan of $695Ìýmillion 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, 2012 on the accompanying consolidated balance sheets. As of DecemberÌý31, 2012, 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. However, Arabian Amines Company, our consolidated 50%-owned joint venture, is currently not in compliance with certain financial covenants under its loan commitments. See "—Variable Interest Entity Debt" above.

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 unless we obtained an appropriate waiver or forbearance (as to which we can provide no assurance). A default under these material financing arrangements generally allows debt holders the option to declare the underlying debt obligations immediately due and payable. Furthermore, 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 fails 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, 2012 are as follows (dollars in millions):