0001590714 FALSE 0001590714 2023-06-01 2023-06-01
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________________________
FORM 8-K
________________________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 1, 2023
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Element Solutions Inc
________________________________________________________
(Exact name of registrant as specified in its charter)

Delaware | 001-36272 |  |  | 37-1744899
(State or other jurisdiction of incorporation) | (Commission File Number) |  |  | (IRS Employer Identification No.)
500 East Broward Boulevard, | Suite 1860 |  | 33394
Fort Lauderdale, | Florida |  |  | (Zip Code)
(Address of principal executive offices) |  |  |

Registrant's telephone number, including area code: (561) 207-9600
Not Applicable
________________________________________________________
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading symbol(s) | Name of each exchange on which registered
Common Stock, par value $0.01 per share | ESI | New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company | ☐ |  |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01. Entry into a Material Definitive Agreement.
Tranche A Term Loans
On June 1, 2023, Element Solutions Inc (the "Company"), MacDermid, Incorporated ("MacDermid," and together with the Company, the "Borrowers"), certain subsidiaries of the Company party thereto, Citibank, N.A., as collateral agent and administrative agent (the "Agent"), and the lenders party thereto, entered into an Amendment No. 7 and Joinder to Credit Agreement ("Amendment No. 7"), which amends that certain credit agreement, dated as of January 31, 2019 (as amended and/or supplemented from time to time, the “Credit Agreement”), among the Borrowers, the Agent and the lending institutions from time to time parties thereto.
Pursuant to Amendment No. 7, the Borrowers borrowed new U.S. dollar-denominated term loans (the "Tranche A Term Loans") under an incremental term loan facility (the "Term Loan A Facility") in an aggregate principal amount of $150 million under the Credit Agreement. The proceeds of the Tranche A Term Loans were used to finance the termination of a long-standing distribution agreement, which transaction closed on June 1, 2023.
The applicable interest rate for the Tranche A Term Loans funded on June 1, 2023 is Term SOFR (as defined in the Credit Agreement), plus a spread of 1.75% per annum.
Borrowings under the Term Loan A Facility bear interest for each interest period at an interest rate per annum plus a spread based on the type of loan selected by the Company. The applicable spread will be 1.75% for Term SOFR loans and 0.75% for base rate loans, plus, in each case, an interest rate per annum equal to (a) for Term SOFR loans, a SOFR rate, subject to a rate floor of 0, and (b) for base rate loans, the highest of the applicable (i) Federal Funds rate plus 0.50%, (ii) prime rate as quoted by The Wall Street Journal, and (iii) SOFR rate for a one-month interest period, plus 1.00%.
Under Amendment No. 7, the Tranche A Term Loans and any other borrowing under the Term Loan A Facility are subject to a maintenance financial covenant, which requires the Borrowers to maintain a first lien net leverage ratio lower than or equal to 5.00 to 1.00 as of the last day of any fiscal quarter, subject to a right to cure.
Except as set forth in Amendment No.7, the Tranche A Term Loans have identical terms as the Company’s existing $750 million tranche B term loans, including a maturity date of January 31, 2026, and are otherwise subject to the provisions of the Credit Agreement. Certain restricted subsidiaries of the Borrowers acting as guarantors under the Credit Agreement (the "Guarantors") will guarantee the Borrowers’ obligations under the Tranche A Term Loans. The Tranche A Term Loans will also be secured by the collateral pledged by the Borrowers and the Guarantors under that certain Pledge and Security Agreement, dated as of January 31, 2019, among the Borrowers, the Guarantors and the predecessor agent (as amended and/or supplemented from time to time, the "Security Agreement"), which is attached hereto as Exhibit 10.7.
The foregoing descriptions of Amendment No. 7 and the Credit Agreement do not purport to be complete and are qualified in their entirety by reference to the full texts of Amendment No. 7, which is attached hereto as Exhibit 10.1, and the Credit Agreement, dated as of January 31, 2019, which is attached hereto as Exhibit 10.2, as amended by Amendments No. 1, 3, 4 and 6, which are included herewith as Exhibits 10.3, 10.4, 10.5 and 10.6, respectively, and which are all incorporated herein by reference. Neither Amendment No. 2 nor Amendment No. 5 to the Credit Agreement was a material amendment.
Swap Transactions
On June 1, 2023, the Company entered into swap transactions (the "Swaps") with certain banks, including lenders of the Tranche A Term Loans (the "Hedge Counterparties"). The Swaps are governed by ISDA Master Agreements with each of the Hedge Counterparties and enable the Company to effectively convert the Tranche A Term Loans, a U.S. dollar denominated debt obligation, into fixed-rate euro-denominated debt through a combination of interest rate swaps and cross-currency swaps. Under the Swap agreements, the Company is required to make periodic euro-denominated coupon payments to the Hedge Counterparties on an aggregate initial notional amount of approximately €140.2 million in exchange for periodic U.S. dollar-denominated coupon payments from the Hedge Counterparties on an aggregate initial notional amount of $150 million at a fixed EUR all-in rate of 4.59%. Each Swap matures on January 31, 2026.
Item 2.03. Creation of a Direct Financial Obligation.
The information set forth under Item 1.01 regarding Amendment No. 7 and the Swaps is incorporated by reference herein.

Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are filed or furnished herewith:

Exhibit Number |  | Description
10.1* |  | Amendment No.7 to Credit Agreement, dated June 1, 2023, among, inter alios, the Company, MacDermid, the subsidiaries of the Company from time to time parties thereto, the lenders from time to time parties thereto, and Citibank, N.A., as administrative and collateral agent. Annexes, other than Annex I, schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. Amendment No. 7 and Annex I, as filed, identify such annexes, schedules and exhibits as well as the general nature of their contents. The Company agrees to furnish a copy of any omitted attachment to the Securities and Exchange commission on a confidential basis upon request.
10.2 |  | Credit Agreement, dated as of January 31, 2019, by and among, inter alia, the Company, MacDermid, the subsidiaries of the borrowers from time to time parties thereto, the lenders from time to time parties thereto, CS, as syndication agent, and Barclays Bank PLC, as administrative agent and collateral agent (filed as Exhibit 10.1 of the Company's Current Report on Form 8-K filed on February 5, 2019, and incorporated herein by reference)
10.3 |  | Amendment No.6 and Joinder to Credit Agreement, dated November 15, 2022, among, inter alios, the Company, MacDermid, the subsidiaries of the Company from time to time parties thereto, the lenders from time to time parties thereto, and Citibank, N.A., as administrative and collateral agent (filed as Exhibit 10.1 of the Company's Current Report on Form 8-K filed on November 15, 2022, and incorporated herein by reference)
10.4 |  | Amendment No.4 to Credit Agreement, dated December 17, 2021, among, inter alios, the Company, MacDermid, the subsidiaries of the Company from time to time parties thereto, the lenders from time to time parties thereto, and Barclays Bank PLC, as administrative and collateral agent (filed as Exhibit 10.4 of the Company's Annual Report on Form 10-K filed on February 23, 2022, and incorporated herein by reference)
10.5 |  | Amendment No.3 to Credit Agreement, dated September 1, 2021, among, inter alios, the Company, MacDermid, the subsidiaries of the Company from time to time parties thereto, the lenders from time to time parties thereto, and Barclays Bank PLC, as administrative and collateral agent (filed as Exhibit 10.1 of the Company's Current Report on Form 8-K filed on September 1, 2021, and incorporated herein by reference)
10.6 |  | Amendment No.1, dated November 26, 2019, among, inter alios, the Company, MacDermid, the subsidiaries of the Company from time to time parties thereto, the lenders from time to time parties thereto, and Barclays Bank PLC, as administrative and collateral agent (filed as Exhibit 10.1 of the Company's Current Report on Form 8-K filed on December 3, 2019, and incorporated herein by reference)
10.7 |  | Pledge and Security Agreement, dated as of January 31, 2019, among the Company, MacDermid and the subsidiaries of the borrowers from time to time parties thereto in favor of Barclays Bank PLC, as collateral agent (filed as Exhibit 10.2 of the Company's Current Report on Form 8-K filed on February 5, 2019, and incorporated herein by reference)
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL)(furnished only)

* Filed herewith

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

|  | ELEMENT SOLUTIONS INC
|  | (Registrant)
June 5, 2023 |  | /s/ John E. Capps
(Date) |  | John E. Capps
|  | Executive Vice President, General Counsel and Secretary