Momentive backstop commitment and restructuring support deals amended

By Caroline Salls

Pittsburgh, June 26 – Momentive Performance Materials Inc. entered a first amendment to its backstop commitment agreement and an eighth amendment to its restructuring support agreement, according to an 8-K filed Thursday with the Securities and Exchange Commission.

Under the original backstop commitment agreement, the commitment parties agreed to provide $600 million to backstop two proposed rights offerings to be conducted in connection with Momentive’s plan of reorganization.

The company said the amendment to the backstop agreement includes technical adjustments to facilitate the calculation of shares issued in the rights offering, changes to milestones and other key dates to conform to changes made to the restructuring support agreement, the deletion of a provision governing credit bidding for the Momentive debtors’ assets, clarification of an indemnification provision and the limitation of circumstances in which a commitment party would receive a commitment premium.

Specifically, the backstop agreement amendment calls for payment of a nonrefundable $30 million premium in consideration for a put option, the backstop commitment and other agreements of the backstop parties.

Momentive will satisfy its commitment premium obligation by issuing 1.48 million additional shares of new common stock out of the total outstanding shares to the commitment parties in lieu of any cash payment. If the agreement does not close, the commitment premium will be payable in cash only.

The backstop commitment amendment also specifies that the company’s good faith estimate, in consultation with the commitment parties and creditors’ committee of the ultimate amount of interest payable under the plan to holders of general unsecured claims will be no more than $400,000.

Under the amendment to the restructuring support agreement with affiliates of Apollo Global Management, LLC and some holders of 9% second-priority springing-lien notes due 2021 and 9½% second-priority springing-lien notes due 2021, the definition of noteholder termination events was modified.

Specifically, the support agreement amendment sets 11:59 p.m. ET on June 24 as the deadline for bankruptcy court approval of the support agreement and its assumption by Momentive, the backstop commitment agreement and the rights offering procedures.

The company must obtain confirmation of its plan by 11:59 p.m. ET on Sept. 14, the 8-K said.

Momentive, a silicones and advanced materials company based in Albany, N.Y., filed bankruptcy on April 13 in the U.S. Bankruptcy Court for the Southern District of New York. The Chapter 11 case number is 14-22503.

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