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Westlake Chemical Corporation

SUMMARY

This summary highlights certain information contained elsewhere or incorporated by reference in this prospectus supplement and the accompanying prospectus. Because this is only a summary, it does not contain all of the information that is important to you. You should read this entire prospectus supplement and accompanying prospectus, as well as the documents incorporated by reference herein, including the risk factors and the financial statements and related notes included elsewhere herein and therein, before making a decision with respect to an investment in the notes. We also urge you to read Westlake’s public filings with the SEC, as they provide additional information about Westlake that you may find important.

In this prospectus supplement, “Westlake,” the “Company,” “we,” “us,” “our” and “our company” refer to Westlake Chemical Corporation and its consolidated subsidiaries, unless the context otherwise requires or unless specified otherwise.

About Westlake Chemical Corporation

Overview

We are a vertically integrated global manufacturer and marketer of basic chemicals, vinyls, polymers and building products. Our products include some of the most widely used chemicals in the world, which are fundamental to many diverse consumer and industrial markets, including flexible and rigid packaging, automotive products, coatings, water treatment, refrigerants, residential and commercial construction as well as other durable and non-durable goods. We operate in two principal operating segments, Olefins and Vinyls. We are highly integrated along our olefins product chain with significant downstream integration into polyethylene and styrene monomer. We are also an integrated global producer of vinyls with substantial downstream integration into polyvinyl chloride (“PVC”) building products.

We began operations in 1986 after our first polyethylene plant, an Olefins segment business, near Lake Charles, Louisiana was acquired from Occidental Petroleum Corporation. We began our vinyls operations in 1990 with the acquisition of a vinyl chloride monomer (“VCM”) plant in Calvert City, Kentucky from the Goodrich Corporation. In 1992, we commenced our Vinyls segment building products operations after acquiring three PVC pipe plants. Since 1986, we have grown rapidly into an integrated global producer of petrochemicals, vinyls, polymers and building products. We achieved this by acquiring existing plants or constructing new plants and completing numerous capacity or production line expansions. We regularly consider acquisitions and other internal and external growth opportunities that would be consistent with or complementary to our overall business strategy.

In 2014, we formed Westlake Chemical Partners LP (“Westlake Partners”) to operate, acquire and develop ethylene production facilities and related assets. Also in 2014, Westlake Partners completed an initial public offering of 12,937,500 common units (the “Westlake Partners IPO”). As of September 30, 2017, Westlake Partners’ assets consist of a 18.3% limited partner interest in Westlake Chemical OpCo LP (“OpCo”), as well as the general partner interest in OpCo. Prior to the Westlake Partners IPO, OpCo’s assets were wholly owned by us. OpCo’s assets include two ethylene production facilities at our Lake Charles site, one ethylene production facility at our Calvert City site and a 200-mile common carrier ethylene pipeline that runs from Mont Belvieu, Texas to the Longview, Texas site, which includes our Longview polyethylene production facility. We retain an 81.7% limited partner interest in OpCo, a 43.8% limited partner interest in Westlake Partners, a general partner interest in Westlake Partners and incentive distribution rights. The operations of Westlake Partners are consolidated in our financial statements. We are party to certain agreements with Westlake Partners and OpCo whereby, among other things, OpCo sells us 95% of the ethylene it produces on a cost-plus basis that is expected to generate a fixed margin per pound of $0.10. We use this ethylene in the production processes of both our Olefins and Vinyls segments.

On August 31, 2016, we completed the acquisition of Axiall Corporation (“Axiall”) for $33.00 per share in an all-cash transaction (the “Merger”), pursuant to the terms of the Agreement and Plan of Merger (the “Merger Agreement”), dated as of June 10, 2016, by and among Westlake, Axiall and Lagoon Merger Sub, Inc., a wholly-owned subsidiary of Westlake. Axiall is a manufacturer and international marketer of chemicals and building products, with manufacturing sites in North America. The combined company is the third-largest global chlor-alkali producer and the third-largest PVC producer in the world.

We benefit from highly integrated production facilities that allow us to process raw materials into higher value-added chemicals and building products. As of September 30, 2017, we (directly and through OpCo and our 95%, 60% and 50% owned Asian joint ventures) had 39.8 billion pounds per year of aggregate production capacity at numerous manufacturing sites in North America, Europe and Asia. We are a Delaware corporation with our principal executive offices located at 2801 Post Oak Boulevard, Suite 600, Houston, Texas 77056. Our telephone number at such address is (713) 960-9111.

Recent Developments

Redemption of GO Zone Bonds

During September, 2017, we directed the Louisiana Local Government Authority Environmental Facilities and Community Development Authority (the “Authority”) to optionally redeem in full $250.0 million aggregate principal amount of the 2007 Series revenue bonds (the “GO Zone Bonds”) at a redemption price of par, plus accrued and unpaid interest, if any, to the redemption date. The GO Zone Bonds were issued by the Authority in December 2007 under the Gulf Opportunity Zone Act of 2005 (GO Zone Act) for the benefit of the Company and were subject to optional redemption by the Authority at any time on or after November 1, 2017 for 100.0% of the principal plus accrued unpaid interest, if any. In connection with the redemption of the Go Zone Bonds on November 1, 2017, the Authority surrendered the $250.0 million of 6 34% tax exempt senior notes due November 2032 to the Company for cancellation. We used cash on hand to fund the redemption of the GO Zone Bonds.

2017 Revenue Refunding Bonds

On November 1, 2017, the Authority issued $250 million of its 2017 Revenue Refunding Bonds on behalf of the Company. In connection with the issuance of the 2017 Revenue Refunding Bonds, we entered into a loan agreement with the Authority under which we agreed to pay the debt service of the 2017 Revenue Refunding Bonds. Under the loan agreement, we have the right to cause the Authority to remarket the 2017 Revenue Refunding Bonds to the public in the future and use the net proceeds of such remarketing to fund a portion of the redemption price of our 2021 Notes and 2023 Notes and for other general corporate purposes. The remarketing of the 2017 Revenue Refunding Bonds is subject to market conditions, among other things, and may not occur.

Westlake Partners Common Unit Offering

On September 29, 2017, Westlake Partners completed a secondary offering of 5,175,000 common units at a price of $22.00 per unit and purchased an additional 5.0% newly-issued limited partner interest in OpCo for approximately $229.2 million resulting in an aggregate 18.3% limited partner interest in OpCo effective July 1, 2017. Net proceeds to Westlake Partners from the sale of the units was $110.7 million, net of underwriting discounts, structuring fees and estimated offering expenses of approximately $3.1 million. Westlake Partners used the proceeds from the offering and the existing revolving credit facility with Westlake Chemical Finance Corporation, our subsidiary, to fund the purchase of the additional 5.0% interest in OpCo.

The Offering

The following summary contains basic information about the notes and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the notes, see “Description of the Senior Notes.” Capitalized terms not otherwise defined herein shall have the same meanings given them in the “Description of the Senior Notes” section of this prospectus supplement.

Issuer

Westlake Chemical Corporation.

Guarantees

The notes will be fully and unconditionally guaranteed, on a joint and several basis, by the Guarantors. The guarantees will be unsecured and unsubordinated obligations of each of the Guarantors and will rank equally with each Guarantor’s other unsecured and unsubordinated indebtedness from time to time outstanding. See “Description of the Senior Notes—Guarantees.” The Guarantors also guarantee our obligations under our existing revolving credit facility and our existing senior notes.

Notes Offered

$500,000,000 aggregate principal amount of % Senior Notes due 2047.

Maturity Date

, 2047.

Interest Rates; Interest Payment Dates

The notes will accrue interest from , 2017 at a rate of % per annum, payable semi-annually in arrears on and of each year, beginning on , 2018.

Ranking

The notes and the guarantees will be:
senior unsecured obligations of Westlake and the Guarantors, respectively;
equal in right of payment to existing and future senior unsecured indebtedness of Westlake and the Guarantors, respectively;
effectively subordinated in right of payment to any existing and future secured indebtedness of Westlake and the Guarantors, respectively, to the extent of the value of the assets securing such indebtedness;
senior in right of payment to existing and future subordinated indebtedness of Westlake and the Guarantors, respectively; and
structurally subordinated to existing and future obligations of our and the Guarantors’ subsidiaries, respectively, that do not guarantee the notes.
As of September 30, 2017, after giving effect to this offering (but not the application of the net proceeds therefrom) the notes and the guarantees would have ranked effectively:

1) junior in right of payment to:

$360.8 million of current liabilities and $223.6 million of long-term indebtedness of our non-guarantor subsidiaries; and

2) pari passu in right of payment with $3.85 billion of our and the Guarantors’ unsecured senior indebtedness.

Optional Redemption

We may, at our option, redeem the notes, in whole or in part, at any time and from time to time prior to , 2047 (six months prior to the maturity date of the notes (the “Par Call Date”)) at a redemption price equal to the greater of:
100% of the principal amount of the notes being redeemed, and
the sum of the present values of the remaining scheduled payments of principal and interest thereon on the notes being redeemed that would be due if the notes matured on the Par Call Date (not including any portion of such payments of interest accrued as of the date of redemption), discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined in “Description of the Senior Notes—Optional Redemption”), plus basis points,
plus accrued and unpaid interest on the notes being redeemed to the redemption date.
We may redeem the notes at our option, in whole or in part at any time on or after the Par Call Date at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest on the notes being redeemed to the redemption date.

Change of Control Triggering Event

Upon the occurrence of a Change of Control Triggering Event (as defined under “Description of the Senior Notes—Change of Control Triggering Event”), we will be required, unless we have exercised our right to redeem the notes, to offer to repurchase the notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

Certain Indenture Provisions

The indenture pursuant to which the notes will be issued will contain covenants that will, among other things, restrict our and certain of our subsidiaries’ ability to:
incur certain secured indebtedness;
engage in certain sale and leaseback transactions; and
consolidate, merge or transfer all or substantially all of our assets.
These covenants will be subject to significant exceptions. See “Description of the Senior Notes—Certain Covenants.”

Form and Denomination of Notes

The notes will be issued in fully registered form only and will initially be represented by one or more global notes which will be deposited with a custodian for, and registered in the name of a nominee of, DTC. The notes will be issued in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

Absence of Established Market for Notes

The notes will be a new issue of securities for which there is no established market. Accordingly, there can be no assurance that a market for the notes will develop or as to the liquidity of any market that may develop. The underwriters have advised us that they currently intend to make a market in the notes. However, they are not obligated to do so and any market-making with respect to the notes may be discontinued without notice. We do not intend to list the notes on any securities exchange or public market or include the notes in any quotation system.

Use of Proceeds

We estimate that the net proceeds from this offering will be approximately $ after deducting the underwriting discounts but before deducting estimated offering expenses payable by us. We intend to use the net proceeds from this offering, together with borrowings under our revolving credit facility plus the proceeds of the remarketing of the 2017 Revenue Refunding Bonds, if remarketed, and cash on hand, to fund the redemption of our 2021 Notes and 2023 Notes on or after February 15, 2018 and May 15, 2018, respectively, and to pay the premium, if any, in connection with such redemptions. See “Use of Proceeds.”

Further issuances

We may, from time to time, without the consent of or notice to holders of the notes, issue and sell debt securities identical to the notes offered hereby in all respects (other than the issue date, and, in some cases, the public offering price and, to the extent applicable, the first date of interest accrual and first interest payment date), so that such additional debt securities will be consolidated and form a single series with the notes offered hereby for all purposes, including voting.

Trustee

The Bank of New York Mellon Trust Company, N.A.

Governing Law

New York

Risk Factors

Investing in the notes involves certain risks. See “Risk Factors” beginning on page S-12 of this prospectus supplement and on page 3 of the accompanying prospectus for a description of certain risks you should consider before investing in the notes.

Summary Consolidated Financial, Operating and Industry Data

We have provided in the table below summary consolidated financial, operating and industry data. We have derived the statement of operations data for each of the years in the three-year period ended December 31, 2016, and the balance sheet data as of December 31, 2014, 2015 and 2016, from audited consolidated financial statements incorporated by reference in this prospectus supplement and the accompanying prospectus. We have derived the statement of operations data for the nine months ended September 30, 2016 and 2017, and the balance sheet data as of September 30, 2016 and 2017, from our unaudited consolidated financial statements. The historical financial information may not be indicative of our future performance. Results of operations for the nine month period ended September 30, 2017 may not be indicative of the results of operations that may be achieved for the entire year. You should read this data in conjunction with the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, and our consolidated financial statements and the related notes, which are incorporated by reference in this prospectus supplement and the accompanying prospectus.

Year Ended December 31,

Nine Months Ended
September 30,

2016

2015

2014

2017

2016

(dollars in thousands)

Statement of Operations Data:

Net sales

$ 5,075,456 $ 4,463,336 $ 4,415,350 $ 6,030,666 $ 3,340,276

Gross profit

980,562 1,185,191 1,317,350 1,271,029 699,084

Selling, general and administrative expenses

295,436 225,364 183,745 379,919 179,757

Transaction and integration-related costs

103,672 9,614 22,949 90,550

Income from operations

581,454 959,827 1,123,991 868,161 428,777

Interest expense

(79,473 ) (34,656 ) (37,352 ) (118,784 ) (36,966 )

Other income (expense), net (1)

56,398 38,270 (2,721 ) 6,591 52,091

Income before income taxes

558,379 963,441 1,083,918 755,968 443,902

Provision for income taxes

138,520 298,396 398,902 232,690 129,332

Net income

$ 419,859 $ 665,045 $ 685,016 $ 523,278 $ 314,570

Balance Sheet Data (end of period):

Cash and cash equivalents

$ 459,453 $ 662,525 $ 880,601 $ 678,233 $ 380,519

Working Capital (2)

1,225,233 1,652,547 1,474,107 1,529,257 1,215,094

Total assets

10,890,253 5,569,285 5,207,532 11,244,125 10,897,049

Long-term debt

3,678,654 758,148 757,539 3,349,402 3,680,585

Stockholders’ equity

3,523,629 3,265,878 2,911,511 4,068,744 3,457,728

Other Financial Data:

Net cash provided by (used for):

Operating activities

$ 833,852 $ 1,078,836 $ 1,032,376 $ 962,664 $ 544,160

Investing activities

(2,562,800 ) (1,006,176 ) (773,205 ) (459,435 ) (2,389,085 )

Financing activities

1,533,217 (286,812 ) 164,640 (306,440 ) 1,560,501

Depreciation and amortization

377,666 245,757 208,486 448,533 227,193

Capital expenditures

628,483 491,426 431,104 414,271 467,330

EBITDA (3)

1,015,518 1,243,854 1,329,756 1,323,285 708,061

Net External Sales:

Olefins Segment

Polyethylene

$ 1,462,407 $ 1,650,964 $ 1,922,535 $ 1,121,603 $ 1,098,500

Styrene, feedstock and other

431,227 609,149 801,155 412,869 324,369

Total Olefins

1,893,634 2,260,113 2,723,690 1,534,472 1,422,869

Vinyls Segment

PVC, caustic soda and other

2,492,562 1,718,359 1,203,332 3,541,409 1,492,650

Building products

689,260 484,864 488,328 954,785 424,757

Total Vinyls

3,181,822 2,203,223 1,691,660 4,496,194 1,917,407

Total

$ 5,075,456 $ 4,463,336 $ 4,415,350 $ 6,030,666 $ 3,340,276
(1) Other income (expense), net is composed of the realized gain from previously held outstanding shares of common stock of Axiall, financing costs incurred in connection with the Merger, interest income, income or loss from equity method investments, dividend income, gains or losses from sales of securities, foreign exchange currency gains or losses, gain on acquisition, impairment of equity method investments, management fee income and other gains and losses.
(2) Working capital equals current assets less current liabilities.
(3) EBITDA (a non-GAAP financial measure) is calculated as net income before interest expense, income taxes, depreciation and amortization. The body of accounting principles generally accepted in the United States is commonly referred to as “GAAP.” For this purpose a non-GAAP financial measure is generally defined by the SEC as one that purports to measure historical and future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so adjusted in the most comparable GAAP measures. We have included EBITDA in this prospectus supplement because our management considers it an important supplemental measure of our performance and believes that it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry, some of which present EBITDA when reporting their results. We regularly evaluate our performance as compared to other companies in our industry that have different financing and capital structures and/or tax rates by using EBITDA. EBITDA allows for meaningful company-to-company performance comparisons by adjusting for factors such as interest expense, depreciation and amortization and taxes, which often vary from company to company. In addition, we utilize EBITDA in evaluating acquisition targets. Management also believes that EBITDA is a useful tool for measuring our ability to meet our future debt service, capital expenditures and working capital requirements, and EBITDA is commonly used by us and our investors to measure our ability to service indebtedness. EBITDA is not a substitute for the GAAP measures of earnings or of cash flows and is not necessarily a measure of our ability to fund our cash needs. In addition, it should be noted that companies calculate EBITDA differently and, therefore, EBITDA as presented in this prospectus supplement may not be comparable to EBITDA reported by other companies. EBITDA has material limitations as a performance measure because it excludes (1) interest expense, which is a necessary element of our costs and ability to generate revenues because we have borrowed money to finance our operations, (2) depreciation, which is a necessary element of our costs and ability to generate revenues because we use capital assets and (3) income taxes, which is a necessary element of our operations. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA only supplementally. The following table reconciles EBITDA to net income and to net cash provided by operating activities.

Reconciliation of EBITDA to Net Income and to Net Cash Provided by Operating Activities

The following table presents the reconciliation of EBITDA to net income and to net cash provided by operating activities, the most directly comparable GAAP financial measures, for each of the periods indicated.

Years Ended December 31,

Nine Months Ended
September 30,

2016

2015

2014

2017

2016

(dollars in thousands)

Net cash provided by operating activities

$ 833,852 $ 1,078,836 $ 1,032,376 $ 962,664 $ 544,160

Changes in operating assets and liabilities and other

(313,316 ) (374,007 ) (288,393 ) (416,092 ) (123,680 )

Deferred income taxes

(100,677 ) (39,784 ) (58,967 ) (23,294 ) (105,910 )

Net income

419,859 665,045 685,016 523,278 314,570

Add:

Depreciation and amortization

377,666 245,757 208,486 448,533 227,193

Interest expense

79,473 34,656 37,352 118,784 36,966

Provision for income taxes

138,520 298,396 398,902 232,690 129,332

EBITDA

$ 1,015,518 $ 1,243,854 $ 1,329,756 $ 1,323,285 $ 708,061

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