Selected Financial Information

2019 Third Quarter Financial Information

Highlights

NOVA Chemicals continued to have solid polyethylene production and sales during the first nine months of 2019, which were offset by lower market pricing. The industry is experiencing lower product pricing as a result of reduced industrial demand and the impact of trade tensions.

For the nine months ended September 30, 2019, we generated profit of $190 million, compared to a loss of $250 million for the nine months ended September 30, 2018. The year-over-year increase in profit was due to the Dow E3 legal provision of $727 million (net of tax) that we recorded in the first quarter of 2018, somewhat offset by lower selling prices for polyethylene and ethylene in the nine months ended September 30, 2019.

Capital spending increased by 74% due to spending on our growth projects for our Ontario operations. We are expanding our Corunna cracker to provide ethylene to a new Advanced SCLAIRTECHTM technology facility that will increase NOVA Chemicals' polyethylene production capacity by approximately 950 million pounds per year. Construction is progressing well for both projects, with start-up targeted for late 2021.


Liquidity and Credit Facilities

We have a senior secured credit agreement provided by a syndicate of lenders that includes a $1,500 million revolving credit facility, which has a maturity date of December 3, 2023, and a 5-year $500 million term loan facility which was permitted to be drawn in a single draw. The revolving credit facility and the term loan facility were undrawn at September 30, 2019 and December 31, 2018, except for letters of credit of $45 million.

We have two accounts receivable securitization programs with combined maximum funding availability of $175 million at September 30, 2019 and December 31, 2018. Our U.S. accounts receivable securitization program allows for maximum funding of $125 million and has a term that expires on January 30, 2020. Our Canadian accounts receivable securitization program allows for maximum funding of $50 million and has a term that expires on February 11, 2020. At September 30, 2019 and December 31, 2018, the programs were undrawn, but the receivables base would have allowed us to draw approximately 59% of the maximum funding availability.

Our senior secured credit agreement and our accounts receivable securitization programs are governed by financial covenants, which require quarterly compliance. The covenants require a maximum senior debt-to-cash flow ratio of 3:1 computed on a rolling 12 month basis and a debt to capitalization ratio not to exceed 65%. We were in compliance with these covenants at September 30, 2019.

We define liquidity as total available capacity under our senior secured credit agreement, less utilization (including letters of credit), plus cash and cash equivalents. Our total liquidity at September 30, 2019 was $2,714 million, compared to $2,885 million at December 31, 2018. In October 2019, utilizing liquidity on hand, we paid an aggregate amount of $1,430 million CAD ($1,080 million USD) to satisfy the judgment with respect to the litigation with Dow Chemical concerning the jointly owned third ethylene plant at our Joffre site. If we had made the litigation payment on September 30, 2019, our total liquidity at September 30, 2019 would have been $1,734 million.

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NOVA Chemicals Corporation (the “Company”) no longer makes its financial statements available to the general public. However, (1) holders of notes of the Company, (2) bona fide prospective investors who are either qualified institutional buyers or are non-US persons, (3) securities analysts, or (4) market makers in Company notes, can access Company information through the Company’s password-protected online data system. If you are included in any one of the above categories and wish to view Company information, please contact Carolyn Rose per the contact information provided below. Prior to providing log-in details, Ms. Rose may require proof that you fall within one of the above categories and are entitled to access to the data site.
 

Carolyn Rose
Senior Corporate Paralegal
E-mail: bondholder@novachem.com

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