Debt	9 Months Ended
Sep. 30, 2014
Debt
DEBT	NOTE 8.DEBT Senior Notes On October 1, 2014, we issued $5.00 billion in aggregate principal amount of our senior notes, including $1.00 billion of 5% senior notes due January 15, 2020 (the 2020 notes), $1.75 billion of 5 1/2% senior notes due September 15, 2021 (the 2021 notes) and $2.25 billion of 6% senior notes due November 15, 2024 (the “2024 notes” and together with the 2020 notes and the 2021 notes, the ‘‘notes’’), in a private placement. The notes were issued at par and initially are fully and unconditionally guaranteed on a senior unsecured basis by all of our material subsidiaries. We used the net proceeds from the private placement to make a $4.95 billion cash distribution to Occidental in October 2014. We will pay interest on the 2020 notes semi-annually in cash in arrears on January 15 and July 15 of each year, beginning on July 15, 2015. We will pay interest on the 2021 notes semi-annually in cash in arrears on March 15 and September 15 of each year, beginning on March 15, 2015. We will pay interest on the 2024 notes semi-annually in cash in arrears on May 15 and November 15 of each year, beginning on May 15, 2015. In connection with the private placement of the notes, we granted the initial purchasers certain registration rights under a registration rights agreement. The indenture governing the notes also provides for special mandatory redemption if Occidental does not complete the spin-off on or prior to January 31, 2015, at a redemption price equal to the issue price plus accrued and unpaid interest. Credit Facilities On September 24, 2014, we entered into a credit agreement with a syndicate of lenders (the Credit Agreement), providing for (i) a senior term loan facility (the Term Loan Facility) and (ii) a senior revolving loan facility (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Credit Facilities”). The Credit Facilities mature on the fifth anniversary of the date the initial aggregate commitment under the Term Loan is funded and the commitments under the Revolving Facility become available for borrowings (the Funding Date). Any borrowings under these facilities will be subject to certain customary conditions. The aggregate initial commitments of the lenders under the Revolving Credit Facility are $2.0 billion and under the Term Loan Facility are $1.0 billion. The Revolving Credit Facility includes a sub-limit of $400 million for the issuance of letters of credit. We expect the Funding Date to occur prior to the spin-off. We will be required to repay the Term Loan Facility in equal quarterly installments equal to 2.5% (10.00% per annum) of the principal amount of the Term Loan Facility beginning on March 31, 2016. We intend to use proceeds from the Credit Facilities to make a $1.05 billion distribution to Occidental prior to the spin-off, settle any outstanding loans with Occidental as of the date of the spin-off and fund any working capital needs. If the spin-off is not consummated by January 31, 2015 and within five business days after the Funding Date, the Credit Facilities will automatically terminate and all amounts thereunder will become due and payable. Borrowings under the Credit Facilities will bear interest at either a LIBOR rate or an alternate base rate (equal to the greatest of (i) the administrative agent’s prime rate, (ii) the one-month LIBOR rate plus 1.00% and (iii) the federal funds effective rate plus 0.50%), at our election, in each case plus an applicable margin. This applicable margin is based on our most recent leverage ratio and will vary from (a) in the case of LIBOR loans, 1.50% to 2.25% and (b) in the case of alternate base rate loans, from 0.50% to 1.25%. The unused portion of the Revolving Credit Facility is subject to commitment fees ranging from 0.30% to 0.50% per annum. All obligations under the Credit Facilities initially will be guaranteed jointly and severally by all of our wholly-owned material subsidiaries, and will be unsecured while we maintain our credit ratings at the minimum levels defined in the Credit Agreement. The assets and liabilities of subsidiaries not guaranteeing the debt are de minimis. The Credit Agreement will also require us to maintain the following financial covenants evidenced as of the last day of each fiscal quarter: (a) a leverage ratio of no more than 4.50 to 1.00 and (b) an interest expense ratio of no less than 2.50 to 1.00.

NOTE 8.DEBT

Senior Notes

On October 1, 2014, we issued $5.00 billion in aggregate principal amount of our senior notes, including $1.00 billion of 5% senior notes due January 15, 2020 (the 2020 notes), $1.75 billion of 5 1/2% senior notes due September 15, 2021 (the 2021 notes) and $2.25 billion of 6% senior notes due November 15, 2024 (the “2024 notes” and together with the 2020 notes and the 2021 notes, the ‘‘notes’’), in a private placement. The notes were issued at par and initially are fully and unconditionally guaranteed on a senior unsecured basis by all of our material subsidiaries. We used the net proceeds from the private placement to make a $4.95 billion cash distribution to Occidental in October 2014.

We will pay interest on the 2020 notes semi-annually in cash in arrears on January 15 and July 15 of each year, beginning on July 15, 2015. We will pay interest on the 2021 notes semi-annually in cash in arrears on March 15 and September 15 of each year, beginning on March 15, 2015. We will pay interest on the 2024 notes semi-annually in cash in arrears on May 15 and November 15 of each year, beginning on May 15, 2015.

In connection with the private placement of the notes, we granted the initial purchasers certain registration rights under a registration rights agreement. The indenture governing the notes also provides for special mandatory redemption if Occidental does not complete the spin-off on or prior to January 31, 2015, at a redemption price equal to the issue price plus accrued and unpaid interest.

Credit Facilities

On September 24, 2014, we entered into a credit agreement with a syndicate of lenders (the Credit Agreement), providing for (i) a senior term loan facility (the Term Loan Facility) and (ii) a senior revolving loan facility (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Credit Facilities”). The Credit Facilities mature on the fifth anniversary of the date the initial aggregate commitment under the Term Loan is funded and the commitments under the Revolving Facility become available for borrowings (the Funding Date). Any borrowings under these facilities will be subject to certain customary conditions.

The aggregate initial commitments of the lenders under the Revolving Credit Facility are $2.0 billion and under the Term Loan Facility are $1.0 billion. The Revolving Credit Facility includes a sub-limit of $400 million for the issuance of letters of credit. We expect the Funding Date to occur prior to the spin-off. We will be required to repay the Term Loan Facility in equal quarterly installments equal to 2.5% (10.00% per annum) of the principal amount of the Term Loan Facility beginning on March 31, 2016. We intend to use proceeds from the Credit Facilities to make a $1.05 billion distribution to Occidental prior to the spin-off, settle any outstanding loans with Occidental as of the date of the spin-off and fund any working capital needs.

If the spin-off is not consummated by January 31, 2015 and within five business days after the Funding Date, the Credit Facilities will automatically terminate and all amounts thereunder will become due and payable.

Borrowings under the Credit Facilities will bear interest at either a LIBOR rate or an alternate base rate (equal to the greatest of (i) the administrative agent’s prime rate, (ii) the one-month LIBOR rate plus 1.00% and (iii) the federal funds effective rate plus 0.50%), at our election, in each case plus an applicable margin. This applicable margin is based on our most recent leverage ratio and will vary from (a) in the case of LIBOR loans, 1.50% to 2.25% and (b) in the case of alternate base rate loans, from 0.50% to 1.25%. The unused portion of the Revolving Credit Facility is subject to commitment fees ranging from 0.30% to 0.50% per annum.

All obligations under the Credit Facilities initially will be guaranteed jointly and severally by all of our wholly-owned material subsidiaries, and will be unsecured while we maintain our credit ratings at the minimum levels defined in the Credit Agreement. The assets and liabilities of subsidiaries not guaranteeing the debt are de minimis.

The Credit Agreement will also require us to maintain the following financial covenants evidenced as of the last day of each fiscal quarter: (a) a leverage ratio of no more than 4.50 to 1.00 and (b) an interest expense ratio of no less than 2.50 to 1.00.