Calumet Plunges 45% Following Dividend Suspension, Preliminary Q1 Results

Shares of Calumet Specialty Products Partners, L.P CLMT, a producer of specialty hydrocarbon products in North America, plunged more than 45 percent Monday morning following a business update.

Calumet said it expects to report a net loss between $83 million and $59 million in the first quarter of 2016, adjusted EBITDA between a ($5.0) million and $10.0 million. The company cited its poor outlook due to a "combination of lower benchmark refined product margins, seasonal weakness in asphalt sales prices and volumes sold, and seasonal softness in the local market premium on motor fuel products sold."

Calumet also announced a private placement of a $400 million principal amount of 11.5 percent senior secured notes due 2021. The company expects to use the proceeds to reduce its oustanding borrowings under its revolving credit facility, to terminate or cash collaterlize certain hedging obligations and for general partnership purposes.

Finally, the company's Board of Directors voted unanimously to suspend its current quarterly cash distribution of $0.685 per unit ($2.74 per unit on an annualized basis). The board noted its decision was based "sustained commodity price volatility and seasonally weak realized margins" in its business."

"The proceeds raised from the senior secured notes offering, in conjunction with a suspension in our quarterly cash distribution, position us to manage our capital structure with prudence and conservatism during a challenging period for our business, while repositioning the Partnership for long-term strategic growth in our core specialty products markets," stated Tim Go, CEO of Calumet. "Moreover, given the completion of a multi-year organic growth project campaign in the first quarter 2016, we anticipate that our current-year capital spending to be well below prior-year levels, consistent with our previously announced forecast."