Calumet Inc DE

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risks discussed in Part I, Item 1A “Risk Factors — Risks Related to our Business” and “— Risks Related to Montana Renewables” in our 2023 Annual Report. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. Aside from the below, there have been no material changes in the risk factors discussed in Part I, Item 1A “Risk Factors” in our 2023 Annual Report. As a result of the completion of the Conversion, the risk factors discussed in Part I, Item 1A “Risk Factors — Risks Related to the Corporate Conversion,” “— Risks Related to Our Partnership Structure” and “— Tax Risks to Common Unitholders” in our 2023 Annual Report are no longer applicable.

Risks Related to the Conversion

The expected benefits of the Conversion may not be obtained.

The success of the Conversion will depend, in part, on New Calumet’s ability to realize the anticipated benefits from being taxed as a corporation. The anticipated benefits of the Conversion may not be realized fully or at all, or may take longer to realize than expected or could have other adverse effects that the Company does not currently foresee. Some of the assumptions that the Company has made with respect to the Conversion may turn out to be inaccurate.

The price of the Common Stock may experience volatility.

The price of the Common Stock may be volatile. In addition to the risk factors described in Part I, Item 1A “Risk Factors — Risks Related to our Business” and “— Risks Related to Montana Renewables” in our 2023 Annual Report, some of the factors that could affect the price of the Common Stock are quarterly increases or decreases in revenue or earnings, changes in revenue or earnings estimates by the investment community, sales of the Common Stock by significant stockholders, a turnover of the investor base as a result of the Conversion, short-selling of the Common Stock by investors, issuance of a significant number of shares to raise additional capital to fund New Calumet’s operations, changes in market valuations of similar companies and speculation in the press or investment community about New Calumet’s financial condition or results of operations. General market conditions and U.S. or international economic factors and political events unrelated to the performance of New Calumet may also affect its stock price.

Risks Related to the Common Stock

New Calumet’s amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make it more difficult for a third party to acquire control of it, even if a change in control would result in the purchase of your shares of Common Stock at a premium to the market price or would otherwise be beneficial to you.

There are provisions in New Calumet’s amended and restated certificate of incorporation and amended and restated bylaws that may make it more difficult for a third party to acquire control of New Calumet, even if a change in control would result in the purchase of your shares of Common Stock at a premium to the market price or would otherwise be beneficial to you. For example, New Calumet’s amended and restated certificate of incorporation authorizes the New Calumet Board to issue preferred stock without stockholder approval. If the New Calumet Board elects to issue preferred stock, it could be more difficult for a third party to acquire New Calumet.

In addition, provisions of New Calumet’s amended and restated certificate of incorporation and amended and restated bylaws provide for a classified board of directors, so that only approximately one-third of New Calumet’s directors are elected each year, and limitations on stockholder actions by written consent and on stockholder proposals and director nominations at meetings of stockholders, which could make it more difficult for a third party to acquire control of New Calumet. Certain provisions of the Delaware General Corporation Law (“DGCL”) may also discourage takeover attempts that have not been approved by the New Calumet Board.

New Calumet’s amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by New Calumet’s stockholders, and the federal district courts as the exclusive forum for Securities Act claims, which could limit stockholders’ ability to obtain what such stockholders believe to be a favorable judicial forum for disputes with New Calumet or its directors, officers, employees or agents.

New Calumet’s amended and restated certificate of incorporation provide that, unless New Calumet selects or consent in writing to the selection of an alternative forum, all complaints asserting any internal corporate claims (defined as claims, including claims in the right of New Calumet: (i) that are based upon a violation of a duty by a current or former director, officer, employee or stockholder in such capacity; or (ii) as to which the DGCL confers jurisdiction upon the Court of Chancery), to the fullest extent permitted by applicable law, and subject to applicable jurisdictional requirements, shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have, or declines to accept, jurisdiction, another state court or a federal court located within the State of Delaware). Further, unless New Calumet selects or consents to the selection of an alternative forum, the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. New Calumet’s choice of forum provision does not apply to suits brought to enforce any liability or duty created by the Exchange Act and investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Any person or entity purchasing or otherwise acquiring any interest in shares of Common Stock will be deemed to have notice of, and consented to, the provisions of New Calumet’s amended and restated certificate of incorporation described in the preceding sentence. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with New Calumet or its directors, officers, employees or agents, which may discourage such lawsuits against New Calumet and such persons. Alternatively, if a court were to find these provisions of New Calumet’s amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, New Calumet may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations.

New Calumet does not expect to pay dividends on its Common Stock for the foreseeable future.

New Calumet does not expect to pay dividends for the foreseeable future. In addition, the Company’s indentures that govern its outstanding senior notes may prohibit it from paying any distributions to New Calumet.

The value of the shares of Common Stock may be diluted by future equity issuances (including upon the exercise of warrants), and shares eligible for future sale may have adverse effects on New Calumet’s share price.

We cannot predict the effect of future sales of shares or the availability of shares for future sales, on the market price of or the liquidity of the market for the shares of Common Stock. Sales of substantial amounts of shares of Common Stock, or the perception that such sales could occur, could adversely affect the prevailing market price of the shares of Common Stock. Such sales, or the possibility of such sales, could also make it difficult for us to sell equity securities in the future at a time and at a price that New Calumet deems appropriate.

New Calumet’s authorized capital stock consists of 700,000,000 shares of Common Stock and 100,000,000 shares of preferred stock, a significant portion of which is unissued. New Calumet may need to raise a significant amount of capital to pay down outstanding indebtedness, including principal, interest and fees due under the Company’s revolving credit facility and senior notes, and may raise such capital through the issuance of newly issued Common Stock or preferred stock. Additionally, outstanding warrants to purchase an aggregate of 2,000,000 shares of Common Stock are exercisable for a period of three years from the date of the completion of the Conversion. Such issuance and sale of equity could be dilutive to the interests of existing stockholders and increase the number of shares eligible for resale in the public market.

Additionally, as of July 31, 2024, the Sponsor Parties beneficially owned approximately 28.7% of the outstanding shares of Common Stock (prior to any potential dilution resulting from exercise of the warrants). The Sponsor Parties received registration rights with respect to the shares of Common Stock and warrants they held following the completion of the Conversion. Pursuant to the Registration Rights Agreement, dated July 10, 2024, by and among New Calumet and the Sponsor Parties (the “Registration Rights Agreement”), New Calumet will file a shelf registration statement with respect to the registrable securities under the Registration Rights Agreement within 30 days of the closing of the Conversion. No more than two times in any 12-month period, the Sponsor Parties may request to sell all or any portion of their registrable securities in an underwritten offering so long as the total offering price is reasonably expected to exceed $25 million. The Registration Rights Agreement includes customary “piggyback” registration rights and also provides that New Calumet will pay certain expenses relating to such registrations and indemnify the stockholders against certain liabilities. Upon registration, the Sponsor Parties’ shares of Common Stock will be eligible for sale into the market without volume limitations. Because of the substantial size of the Sponsor Parties’ holdings, the sale of a significant portion of these shares, or a perception in the market that such a sale is likely, could have a significant impact on the market price of such shares.