Momentive specifies interest for replacement notes in modified plan

By Kali Hays

New York, Sept. 4 – Momentive Performance Materials Inc. detailed the interest rates for its replacement 1.5-lien notes and replacement first-lien notes in an amended plan of reorganization filed Wednesday with the U.S. Bankruptcy Court for the Southern District of New York.

Under the amended plan, the interest rate for the 1.5-lien notes will be the Treasury rate plus 275 basis points and the interest rate for the first-lien notes will be the Treasury rate plus 200 bps.

As previously reported, the company said the court expressed its intention to confirm the proposed plan after certain modifications were made and submitted, according to an Aug. 27 news release.

Key terms of the plan include a $600 million rights offering, which will provide a significant equity infusion to the company and 100% recovery to trade creditors and other general unsecured creditors.

Upon emergence, Momentive will have eliminated about $3 billion of debt from its balance sheet and will have liquidity of around $425 million and net debt of roughly $1.2 billion, the release stated.

Treatment of creditors under the proposed plan will include the following:

• 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.

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.

© 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.