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Long-Term Debt | 12 Months Ended
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Dec. 31, 2011
Long-Term Debt [Abstract] |
Long-Term Debt | 9. Long-Term Debt
|  | December 31, |
|  | 2011 |  |  | 2010 |
|  | (In Thousands) |
Working Capital Revolver Loan due 2012 (A) |  | $ | — |  |  | $ | — |
5.5% Convertible Senior Subordinated Notes due 2012 (B) |  |  | — |  |  |  | 26,900 |
Secured Term Loan (C) |  |  | 72,188 |  |  |  | 48,773 |
Other, with a current weighted-average interest rate of 6.71%, most of which is secured by machinery, equipment and real estate (D) |  |  | 7,272 |  |  |  | 19,719 |
|  |  | 79,460 |  |  |  | 95,392 |
Less current portion of long-term debt (E) |  |  | 4,935 |  |  |  | 2,328 |
Long-term debt due after one year (E) |  | $ | 74,525 |  |  | $ | 93,064 |
(A) Our wholly-owned subsidiary, ThermaClime, LLC (“ThermaClime”) and its subsidiaries (collectively, the “Borrowers”) are parties to a $50 million revolving credit facility (the “Working Capital Revolver Loan”) that provides for advances based on specified percentages of eligible accounts receivable and inventories for ThermaClime and its subsidiaries. The Working Capital Revolver Loan accrues interest at a base rate (generally equivalent to the prime rate) plus .50% or LIBOR plus 1.75%. The interest rate at December 31, 2011 was 3.75%. Interest is paid monthly, if applicable. Since the Working Capital Revolver Loan matures on April 13, 2012, the Borrowers are negotiating an amendment to extend this facility. The amendment is expected to be completed before the maturity date. The Working Capital Revolver Loan provides for up to $8.5 million of letters of credit. All letters of credit outstanding reduce availability under the Working Capital Revolver Loan. As of December 31, 2011, amounts available for borrowing under the Working Capital Revolver Loan were approximately $48.6 million. Under the Working Capital Revolver Loan, the lender also requires the Borrowers to pay a letter of credit fee equal to 1% per annum of the undrawn amount of all outstanding letters of credit, an unused line fee equal to .375% per annum for the excess amount available under the Working Capital Revolver Loan not drawn and various other audit, appraisal and valuation charges. The lender may, upon an event of default, as defined, terminate the Working Capital Revolver Loan and make the balance outstanding, if any, due and payable in full. The Working Capital Revolver Loan is secured by the assets of all the ThermaClime entities other than El Dorado Nitric Company and its subsidiaries (“EDN”) but excluding the assets securing the secured term loan discussed in (C) below, certain production equipment and facilities utilized by the Climate Control Business, and certain distribution-related assets of El Dorado Chemical Company (“EDC”). In addition, EDN is neither a borrower under, nor guarantor of, the Working Capital Revolver Loan. The carrying value of the pledged assets is approximately $258 million at December 31, 2011. The Working Capital Revolver Loan requires ThermaClime to meet certain financial covenants, including an EBITDA requirement of greater than $25 million; a minimum fixed charge coverage ratio of not less than 1.10 to 1; and a maximum senior leverage coverage ratio of not greater than 4.50 to 1. These requirements are measured quarterly on a trailing twelve-month basis and as defined in the agreement. ThermaClime was in compliance with those covenants during 2011. The Working Capital Revolver Loan also contains covenants that, among other things, limit the Borrowers’ (which does not include LSB) ability, without consent of the lender and with certain exceptions, to:
| • |  | incur additional indebtedness,
| • |  | incur liens,
| • |  | make restricted payments or loans to affiliates who are not Borrowers,
| • |  | engage in mergers, consolidations or other forms of recapitalization, or
| • |  | dispose assets.
The Working Capital Revolver Loan also requires all collections on accounts receivable be made through a bank account in the name of the lender or their agent. (B) In June 2007, we entered into a purchase agreement with each of twenty two qualified institutional buyers (“QIBs”), pursuant to which we sold $60 million aggregate principal amount of the 5.5% convertible debentures (“2007 Debentures”) in a private placement to the QIBs pursuant to the exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Act”), afforded by Section 4(2) of the Act and Regulation D promulgated under the Act. The 2007 Debentures bore interest at the rate of 5.5% per year. In previous years, we have acquired a certain portion of the 2007 Debentures, with each purchase being negotiated. During 2011, the remaining 2007 Debentures were converted into shares of LSB common stock including the portion of 2007 debentures held by Jack E. Golsen, our chairman of the board and chief executive officer (“CEO”), members of his immediate family (spouse and children), entities owned by them and trusts for which they possess voting or dispositive power as trustee (collectively, the “Golsen Group”) as discussed in Note 19-Related Party Transactions. In addition for financial reporting purposes, one of the conversion transactions with an unrelated third party was considered an induced conversion. The following is a summary of transactions relating to the 2007 Debentures for each respective year:
|  | 2011 |  |  | 2010 |  |  | 2009 |
|  | (Dollars In Thousands) |
Principal amounts converted or acquired |  | $ | 26,900 |  |  | $ | 2,500 |  |  | $ | 11,100 |
Cash paid for acquisitions |  | $ | — |  |  | $ | 2,494 |  |  | $ | 8,938 |
Shares of LSB common stock issued |  |  | 979,160 |  |  |  | — |  |  |  | — |
(C) On March 29, 2011, ThermaClime and certain of its subsidiaries entered into an amended and restated term loan agreement (the “Amended Agreement”), which amended ThermaClime’s existing term loan agreement (the “Original Agreement”), dated November 2, 2007, as previously amended. Pursuant to the terms of the Amended Agreement, the maximum principal amount of ThermaClime’s term loan facility (the “Secured Term Loan”) was increased from $50 million to $60 million. On May 26, 2011, the principal amount of the Secured Term Loan was increased an additional $15 million to $75 million pursuant to the terms of the Amended Agreement. The Amended Agreement also extended the maturity of the Secured Term Loan from November 2, 2012, to March 29, 2016. The Secured Term Loan continues to be guaranteed by LSB. For financial reporting purposes, this transaction is considered a non-substantial modification of the Original Agreement.
The Secured Term Loan requires quarterly principal payments of approximately $0.9 million, plus interest and a final balloon payment of $56.3 million due on March 29, 2016. The stated interest rate on the Secured Term Loan includes a variable interest rate (based on three-month LIBOR plus 300 basis points, which rate is adjusted quarterly) and a fixed interest rate as detailed below:
|  | December 31, |
|  | 2011 |
|  | Stated Interest |  |  | Principal |
|  | Rate |  |  | Balance |
|  | (Dollars In Thousands) |
Variable interest rate |  |  | 3.57 | % |  | $ | 48,125 |
Fixed interest rate |  |  | 5.15 | % |  |  | 24,063 |
Weighted-average interest rate |  |  | 4.10 | % |  | $ | 72,188 |
The Secured Term Loan is secured by the real property and equipment located at our El Dorado Facility and our chemical production facility located in Cherokee, Alabama (the “Cherokee Facility”). The carrying value of the pledged assets is approximately $72 million at December 31, 2011. The Secured Term Loan borrowers are subject to numerous covenants under the Amended Agreement including, but not limited to, limitation on the incurrence of certain additional indebtedness and liens; limitations on mergers, acquisitions, dissolution and sale of assets; and limitations on declaration of dividends and distributions to LSB, all with certain exceptions. At December 31, 2011, the carrying value of the restricted net assets (including pledged assets) of ThermaClime and its subsidiaries was approximately $97 million. As defined in the agreement, the Secured Term Loan borrowers are also subject to a minimum fixed charge coverage ratio of not less than 1.10 to 1 and a maximum leverage ratio of not greater than 4.50 to 1. Both of these requirements are measured quarterly on a trailing twelve-month basis. The Secured Term Loan borrowers were in compliance with these financial covenants during 2011. The maturity date of the Secured Term Loan can be accelerated by the lender upon the occurrence of a continuing event of default, as defined. The Working Capital Revolver Loan agreement (discussed in (A) above) and the Secured Term Loan contain cross-default provisions. If ThermaClime fails to meet the financial covenants of either of these agreements, the lenders may declare an event of default. A prepayment premium equal to 2.5% of the principal amount prepaid is due to the lenders should the borrowers elect to prepay on or prior to March 29, 2012. This premium is reduced to 1.0% during the following 24-month period and is eliminated thereafter. (D) Amounts include capital lease obligations of $749,000 and $1,211,000 at December 31, 2011 and 2010, respectively. (E) Maturities of long-term debt for each of the five years after December 31, 2011 are as follows (in thousands):
2012 |  | $ | 4,935 |
2013 |  |  | 4,937 |
2014 |  |  | 4,685 |
2015 |  |  | 4,702 |
2016 |  |  | 58,195 |
Thereafter |  |  | 2,006 |
|  | $ | 79,460 |

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 22 -Article 5 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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