For the first quarter 2016, based on preliminary data, Calumet currently expects to report a net loss between $83.0 million and $59.0 million, Adjusted EBITDA of between $(5.0) million and $10.0 million and Adjusted EBITDA, Excluding Special Items of between $(17.0) million and $3.0 million.
Financial results for the first quarter 2016 reflect 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, compared to benchmark Gulf Coast prices, and reduced customer drilling and completion activity in the oilfield services segment.
"Our first quarter results were impacted by weakness in our fuel products segment, partially offset by continued stability in our core specialty products segment," stated Tim Go, CEO Calumet. "During January and February, realized fuel margins were challenged in our niche products markets, similar to conditions evidenced during the fourth quarter 2015, while asphalt inventories increased ahead of the spring selling season, reducing cash receipts in the first quarter 2016."
"As previously disclosed, we have begun to implement a series of self-help initiatives in all areas of the organization, including projects that position us to increase the volume of cost-advantaged heavy Canadian crude oil processed at our facilities over the next two years," continued Go. "While the fourth quarter 2015 and the first quarter 2016 were challenging, we are keenly focused on addressing our liquidity needs and other measures to position the Partnership for improved performance."
As of March 31, 2016, the Partnership had estimated pro forma availability under its revolving credit facility, giving effect to the application of net proceeds from the notes offering, of $397.9 million, based on an estimated $461.4 million borrowing base, $63.5 million in outstanding standby letters of credit and no outstanding borrowings. In addition, the company had an estimated $7.4 million of cash on hand as of March 31, 2016.
In an April 15 press release Calumet stated that, as previously announced, in an earlier press release also on April 15, 2016, the Partnership priced a private placement of $400 million principal amount of 11.5% senior secured notes due 2021. The notes and the guarantees of the notes will be secured by a first-priority lien on all of the fixed assets that secure the Partnership's obligations under its secured hedge agreements and will be guaranteed on a senior secured basis by most of the Partnership's existing subsidiaries that guarantee obligations under its revolving credit facility and certain of the Partnership's future subsidiaries. The Partnership expects to use net proceeds from the offering to reduce outstanding borrowings under the Partnership's revolving credit facility, to terminate or cash collateralize certain of the Partnership's existing hedging obligations and for general partnership purposes. The offering is expected to close on April 20, 2016, subject to customary closing conditions.
Calumet also announced that in view of current volatility in market conditions and as part of a broader effort to maintain an adequate level of liquidity at the Partnership, the Board of Directors of Calumet's General Partner unanimously voted to suspend the current quarterly cash distribution of $0.685 per unit, or $2.74 per unit on an annualized basis, effective for the quarter ended March 31, 2016.
