Chemtura gets final OK for $400 mln DIP loan

Date:05-04-2009

Bankrupt chemicals and plastics maker Chemtura Corp said on Wednesday that a federal bankruptcy court granted final approval for a $400 million "debtor-in-possession" loan arranged by Citibank N.A. (C.N).

In March, Connecticut-based Chemtura had won the right to interim access to $190 million of the loan to finance its operations, pending final approval.

A DIP loan allows a bankrupt company to fund its operations during its reorganization and is considered relatively safe because such financing gets reimbursement priority.

In a statement, Chemtura said the loan would help it continue funding employee wages and benefits, pay suppliers and finance its day-to-day operations.

"We believe that the final DIP approval provides the company with the financial flexibility necessary to continue running our operations as normal through the remainder of the restructuring process," Chemtura Chief Executive Craig Rogerson said in the statement.

Chemtura, which makes specialty chemicals, crop protection products and pool products, also said it won the right to send money as needed to its foreign affiliates, which were not included in the U.S. parent's Chapter 11 bankruptcy protection filing in March.

Chemtura's U.S. operations, which included 26 affiliates, filed for bankruptcy protection because of a significant decrease in liquidity caused by sharp declines in order volumes.

Chemtura listed assets of $3.06 billion and debts of $2.6 billion as of Dec. 31, 2008, according to documents filed in March in U.S. Bankruptcy Court for the Southern District of New York in Manhattan, and had sales of $3.5 billion in 2008.

The company has taken various steps to control costs such as suspending its dividend, cutting jobs and slashing payrolls.