Long-Term Debt

12 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Long-Term Debt

Note 9—Long-term debt:

	December 31,
	2019			2020
	(In millions)
Valhi:
Contran credit facility	$	313.0		$	270.7
Subsidiary debt:
Kronos:
Senior Secured Notes		442.6			485.7
Tremont:
Promissory note payable		2.0			-
BMI:
Bank loan Western Alliance Bank		17.2			16.3
LandWell:
Note payable to Western Alliance Business Trust		15.0			14.2
Note payable to the City of Henderson		1.6			-
Other		2.9			1.7
Total subsidiary debt		481.3			517.9
Total debt		794.3			788.6
Less current maturities		(4.9	)		(2.4	)
Total long-term debt	$	789.4		$	786.2

Valhi— Contran credit facility—We have an unsecured revolving credit facility with Contran which, as amended, provides for borrowings from Contran of up to $320 million. The facility, as amended, bears interest at prime plus 1% (4.25% at December 31, 2020), and is due on demand, but in any event no earlier than December 31, 2022. The facility contains no financial covenants or other financial restrictions. Valhi pays an unused commitment fee quarterly to Contran on the available balance (except during periods during which Contran would be a net borrower from Valhi). The average interest rate on the credit facility for the year ended December 31, 2020 was 4.5%. During 2020 we made no borrowings and we repaid $42.3 million under this facility and at December 31, 2020 an additional $49.3 million was available for borrowings under this facility.  

Kronos—Senior Notes—On September 13, 2017, Kronos International, Inc. (“KII”), Kronos’ wholly-owned subsidiary, issued €400 million aggregate principal amount of its 3.75% Senior Secured Notes due September 15, 2025 (the “Senior Notes”), at par value ($477.6 million when issued).  The Senior Notes:

● bear interest at 3.75% per annum, payable semi-annually on March 15 and September 15 of each year, payments began  on March 15, 2018;

● have a maturity date of September 15, 2025.  Prior to September 15, 2020, Kronos had an option to redeem some or all of the Senior Notes at a price equal to 100% of the principal amount thereof, plus a “make-whole” premium (as defined in the indenture governing the Senior Notes).  On or after September 15, 2020, Kronos may redeem the Senior Notes at redemption prices ranging from 102.813% of the principal amount, declining to 100% on or after September 15, 2023.  In addition, on or before September 15, 2020, Kronos had an option to redeem up to 40% of the Senior Notes with the net proceeds of certain public or private equity offerings at 103.75% of the principal amount but Kronos did not elect this option.  If Kronos experiences certain specified change of control events, it would be required to make an offer to purchase the Senior Notes at 101% of the principal amount.  Kronos would also be required to make an offer to purchase a specified portion of the Senior Notes at par value in the event that it generates a certain amount of net proceeds from the sale of assets outside the ordinary course of business, and such net proceeds are not otherwise used for specified purposes within a specified time period;  

● are fully and unconditionally guaranteed, jointly and severally, on a senior secured basis by Kronos Worldwide, Inc. and each of its direct and indirect domestic, wholly-owned subsidiaries;

● are collateralized by a first priority lien on (i) 100% of the common stock or other ownership interests of each existing and future direct domestic subsidiary of KII and the guarantors, and (ii) 65% of the voting common stock or other ownership interests and 100% of the non-voting common stock or other ownership interests of each foreign subsidiary that is directly owned by KII or any guarantor;

● contain a number of covenants and restrictions which, among other things, restrict Kronos’ ability to incur or guarantee additional debt, incur liens, pay dividends or make other restricted payments, or merge or consolidate with, or sell or transfer substantially all of its assets to, another entity, and contain other provisions and restrictive covenants customary in lending transactions of this type (however, there are no ongoing financial maintenance covenants); and

● contain customary default provisions, including a default under any of Kronos’ other indebtedness in excess of $50.0 million.

The carrying value of the Senior Notes at December 31, 2020 is stated net of unamortized debt issuance costs of $4.7 million (at December 31, 2019 the balance was $5.3 million).

Revolving North American credit facility—Kronos has a $125 million revolving bank credit facility that, as amended, matures in January 2022.   Borrowings under the revolving credit facility are available for Kronos’ general corporate purposes. Available borrowings on this facility are based on formula-determined amounts of eligible trade receivables and inventories, as defined in the agreement, of certain of Kronos’ North American subsidiaries less any outstanding letters of credit up to $15 million issued under the facility (with revolving borrowings by Kronos’ Canadian subsidiary limited to $25 million). Any amounts outstanding under the revolving credit facility bear interest, at Kronos’ option, at LIBOR plus a margin ranging from 1.5% to 2.0% or at the applicable base rate, as defined in the agreement, plus a margin ranging from .5% to 1.0%. The credit facility is collateralized by, among other things, a first priority lien on the borrowers’ trade receivables and inventories. The facility contains a number of covenants and restrictions which, among other things, restricts the borrowers’ ability to incur additional debt, incur liens, pay dividends or merge or consolidate with, or sell or transfer all or substantially all of their assets to, another entity, contains other provisions and restrictive covenants customary in lending transactions of this type and under certain conditions requires the maintenance of a specified financial covenant (fixed charge coverage ratio, as defined) to be at least 1.0 to 1.0.

Kronos had no borrowings or repayments under this facility in 2019 and 2020.  At December 31, 2019, Kronos had approximately $107.6 million available for borrowing under this revolving facility.

Revolving European credit facility— Kronos’ operating subsidiaries in Germany, Belgium, Norway and Denmark have a €90 million secured revolving credit facility that, as amended, matures in September 2022.   Outstanding borrowings bear interest at the Euro Interbank Offered Rate (EURIBOR) plus 1.60% per annum.  The facility is collateralized by the accounts receivable and inventories of the borrowers, plus a limited pledge of all of the other assets of the Belgian borrower.  The facility contains certain restrictive covenants that, among other things, restrict the ability of the borrowers to incur debt, incur liens, pay dividends or merge or consolidate with, or sell or transfer all or substantially all of the assets to, another entity, and requires the maintenance of certain financial ratios.  In addition, the credit facility contains customary cross-default provisions with respect to other debt and obligations of the borrowers, KII and its other subsidiaries.   

Kronos had no borrowing or repayments under this facility during 2019 and 2020 and at December 31, 2020, there were no outstanding borrowings under this facility. Kronos’ European revolving credit facility requires the maintenance of certain financial ratios, and one of such requirements is based on the ratio of net debt to last twelve months earnings before income tax, interest, depreciation and amortization expense (EBITDA) of the borrowers.   Based upon the borrowers’ last twelve months EBITDA as of December 31, 2020 and the net debt to EBITDA financial test, the full €90 million ($110.3 million) was available for borrowing at December 31, 2020.

Other.  In 2013, and in conjunction with the acquisition of a controlling interest of our Real Estate Management and Development Segment, Tremont issued a $19.1 million promissory note with the seller, Nevada Environmental Response Trust (“NERT”).  The note bore interest at 3% per annum, with interest payable annually and all principal due in December 2023. The

promissory note was collateralized by the BMI and LandWell interests acquired as well as the real property acquired from NERT as part of the transaction. The note could be prepaid at any time without penalty. We were required to make mandatory prepayments on the note in specified amounts whenever we received distributions from BMI or LandWell, or in the event we sold any of the real property acquired.  We made principal prepayments of $7.4 million during 2019 under the terms of the note, and in 2020 we fully repaid (without penalty) the remaining principal balance of $2.0 million on the note.  

In February 2017, a wholly-owned subsidiary of BMI entered into a $20.5 million loan agreement with Western Alliance Bank.  The proceeds were used to refinance the $8.5 million outstanding bank note payable to Meadows Bank and to finance improvements to BMI’s water delivery system. The agreement requires semi-annual payments of principal and interest on June 1 and December 1 aggregating $1.9 million annually beginning on June 1, 2017 through the maturity date in June 2032.  The agreement bears interest at 5.34% and is collateralized by certain real property, including the water delivery system, and revenue streams under the City of Henderson water contract. The carrying value of the loan is stated net of debt issuance costs of $.6 million at December 31, 2020.  

Prior to 2018, LandWell entered into a $3.9 million promissory note payable to the City of Henderson, Nevada. The note required semi-annual principal payments of $250,000 payable solely from cash received from certain specified revenue sources with any remaining unpaid balance due in October 2020, see Note 18. The loan bore interest at a 3% fixed rate.  We made payments of $.4 million during 2019 using receipts from the specified revenue sources and in January 2020, LandWell fully repaid this note using proceeds from the new loan discussed below.  

In December 2019, LandWell entered into a $15.0 million loan agreement with Western Alliance Business Trust.  The proceeds will be used to finance certain public infrastructure costs incurred by LandWell under the OPA Landwell has with the Redevelopment Agency of the City of Henderson, Nevada as more fully discussed in Note 7, and to repay the City of Henderson note discussed above.  The agreement requires semi-annual payments of principal and interest on April 15 and October 15 aggregating $1.3 million annually beginning on April 15, 2020 through the maturity date in April 2036 and is payable from the tax increment reimbursement funds received under the OPA. The agreement bears interest at a fixed 4.76% rate and is collateralized by all tax increment reimbursement funds LandWell receives under the OPA.   

Aggregate maturities of long-term debt at December 31, 2020

Aggregate maturities of debt at December 31, 2020 are presented in the table below.

Years ending December 31,	Amount
	(In millions)
Gross amounts due each year:
2021	$	2.4
2022		273.2
2023		2.2
2024		1.9
2025		492.5
2026 and thereafter		21.9
Subtotal	$	794.1
Less amounts representing original issue discount and debt issuance costs		(5.5	)
Total long-term debt	$	788.6

We are in compliance with all of our debt covenants at December 31, 2020.