Hexion accepts tenders for all 8% notes, plans to redeem remaining 13½%, 9½% notes

By Jennifer Chiou

New York, May 18 - Hexion Specialty Chemicals, Inc. said it accepted tenders from holders of all of its $140 million of 8% senior secured notes due 2009, $292.04 million of its $328 million of 13½% senior subordinated notes due 2010 and $199.881 million of its $200 million of 9½% senior second secured notes due 2010.

The offers ended at midnight ET on May 17.

Hexion said it will redeem all remaining 13½% notes and 9½% notes on June 18 at 106.75% and 104.75%, respectively. For each $1,000 principal amount, the company will also pay $12.38 for the 13½% notes and $16.62 for the 9½% notes, accounting for accrued interest.

On May 5, the company accepted notes tendered before 11:30 a.m. ET on May 5, including $290.859 million of the 13½% notes, $199.801 million of the 9½% notes and all of its 8% notes.

For each $1,000 principal amount of 8% notes, the company said it paid $1,053.04, which includes a consent payment of $30.00. The payout was determined using the yield to maturity of the 2.875% Treasury due Nov. 30, 2006 and 50 basis points.

For each $1,000 principal amount, Hexion previously said it paid $1,071.25 for the 13½% notes and $1,050 for the 9½% notes.

The payouts include a $30.00 consent payment for those who tendered their securities by the consent deadline on May 3.

The company added it paid accrued interest up to but excluding the payment date.

On May 3, the company said it obtained sufficient consents to amend the indentures of its 13½% notes, 9½% notes and the 8% notes.

By the consent deadline of 5 p.m. ET on May 3, holders had tendered with consents 88.7% of the 13½% notes, 99.9% of the 9½% notes and all the 8% notes.

Hexion previously said it will now make the consent payment to all holders who tender before the expiration date.

The company also said it entered into supplemental indentures.

Hexion announced the tender on April 21 and the Columbus, Ohio, thermoset resins producer also said it was soliciting consents to eliminate most of the restrictive covenants and certain events of default in the notes' indentures and to terminate the security interests that secure certain obligations under the 8% notes and 9½% notes.

Credit Suisse Securities (USA) LLC is the dealer manager (800820-1653 or call collect 212 538-0652). D.F. King & Co., Inc. is the information agent (800 290-6426 or call collect 212 269-5550).

Hexion and HSC Capital Corp. issued the notes.

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