Disposition and Exit of Business Activities

12 Months Ended

Dec. 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

Disposition and Exit of Business Activities

Disposition and Exit of Business Activities

On March 6, 2020, we completed the sale of our Cariflex business to Daelim Industrial Co., Ltd. (subsequently renamed “DL Holdings Co., Ltd.”) for gross proceeds of $530.0 million and net proceeds of $510.5 million. During the year ended December 31, 2021, we completed final customary post-closing working capital adjustments, reducing cash proceeds received to date by an additional $5.8 million. In addition, during the fourth quarter of 2021, we recognized a loss on disposition and exit of business activities of $0.1 million related to these final customary post-closing working capital adjustments. We expect to make a final payment of $2.9 million in the first quarter of 2022 related to final contractual capital expenditure costs.

Upon closing, we recognized a gain of $175.2 million, and as part of the consideration received, entered into a multi-year IRSA with DL Chemical. As the IRSA product sales are at cost, we deferred approximately $180.6 million, of which $158.2 million and $22.4 million were recorded within deferred income and other payables and accruals, respectively, on the Consolidated Balance Sheet as of the transaction date. The deferred income will be amortized into revenue as a non-cash transaction when the products are sold. In accordance with the IRSA, we will supply Isoprene Rubber to DL Chemical for a period of five years from the sale closing date, with an optional extension for an additional five years.

We used the $504.7 million net proceeds from the sale of our Cariflex business principally for repayment of the full outstanding balance of $290.0 million under the U.S. dollar denominated tranche (the “USD Tranche”) of the Company’s senior secured term loan facility (the “Term Loan Facility”) and repayment in the amount of €160.0 million (or approximately $184.8 million) of borrowings under the Euro dollar denominated tranche (the “Euro Tranche”) of the Term Loan Facility. We used the remaining proceeds in accordance with the terms of the Term Loan Facility to make additional repayments of debt and invest in strategic assets in the Company.