Momentive submits plan; disclosure statement hearing set for June 19

By Caroline Salls

Pittsburgh, May 13 - Momentive Performance Materials Inc. filed its plan of reorganization and related disclosure statement on Monday with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, the company filed bankruptcy after reaching a restructuring support agreement with some key stakeholders on the terms of a balance sheet restructuring plan that will reduce long-term debt and enhance liquidity.

The company said the key terms of the support agreement include a $600 million rights offering, which will provide a significant equity infusion, along with the securing of commitments for $1.3 billion of exit financing.

Momentive said the agreement is supported by holders owning about 85% of its second-lien notes.

Under the plan:

• General unsecured creditors and holders of claims arising from the company's cash flow facility, first-lien notes and 1.5 lien notes will be paid in full;

• Second-lien notes will be converted into new equity of the reorganized company, subject to dilution by a management incentive plan and the equity to be issued under the rights offering;

• Holders of second-lien notes will receive subscription rights for the rights offering, giving them the opportunity to purchase a percentage of the new equity at a price per share determined by using the capital structure and an enterprise value of $2.2 billion and applying a 15% discount to the equity value;

• Holders of holding company PIK notes will receive available cash;

• Existing interest holders, subordinated noteholders and securities law claimants will receive nothing; and

• Consenting noteholders have agreed to backstop the rights offering in exchange for a fee, payable in new equity, of an additional 5% of the rights offering amount.

The company said this fee is payable in kind at the closing of the rights offering, or in cash, if Momentive terminates the backstop commitment.

The disclosure statement hearing is scheduled for June 19.

Momentive, a silicones and advanced materials company based in Albany, N.Y., filed bankruptcy on April 13. The Chapter 11 case number is 14-22503.

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