Hexion $440 million and Momentive $840 million equivalent notes to address 2014 maturities

By Paul A. Harris

St. Louis, Oct. 22 - Momentive Performance Materials announced plans on Friday to tap the high-yield market via the capital structures of Hexion Specialty Chemicals, Inc. and Momentive Performance Materials Inc. in order to refinance bond debt that remains on the books in the wake Apollo Management's merger of the two chemical companies earlier this month.

Both entities plan to issue 10-year notes, which are expected to come with triple C equivalent credit ratings, with five years of call protection.

Hexion plans to raise $440 million via the sale of second-lien senior secured notes. Proceeds will be used to help fund a concurrent tender offer for Hexion's $532.9 million of outstanding of 9¾% second-lien notes due 2014.

Momentive, meanwhile, plans to raise $840 million equivalent of springing-lien notes. The Momentive notes, which will be offered in dollar and euro denominations, will be unsecured prior to the redemption of the company's 12½% notes due 2011, callable in December 2011 at 106.25. Following that redemption, the new 10-year notes will be backed with second-lien security.

Momentive will use the proceeds to help fund its tender offers for $716.6 million of 9¾% notes due 2014, €245.2 million of 9% notes due 2014, and $214.2 million of 10 1/8%/10 7/8% PIK toggle notes due 2014.

J.P. Morgan Securities LLC, Citigroup, Credit Suisse, Morgan Stanley, UBS Investment Bank, Bank of America Merrill Lynch, Deutsche Bank Securities Inc. and Goldman Sachs & Co. are managing the combined note offerings.

Marketing began on Friday and will continue into the Oct. 25 week, with the bonds expected to price on Wednesday.

Apollo owns about $234.3 million principal amount of the 9¾% notes, €88.2 million principal amount of the 9% notes, and $139.4 million principal amount of the toggle notes, representing approximately 33%, 36% and 65%, respectively, of the outstanding amounts of notes.

Concurrently with the new note offerings, Apollo will enter into an agreement to exchange the entire amount for dollar-denominated springing notes (see related story in this issue).

Momentive Performance Materials Holdings, the parent, is an Albany, N.Y.-based specialty materials company, providing high-technology materials products to the silicone, quartz and ceramics markets.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.