Hexion fixes tender price for 9% notes

By Angela McDaniels

Seattle, Oct. 30 - Hexion Specialty Chemicals, Inc. said it will pay $1,133.84 per $1,000 principal amount of 9% second-priority senior secured notes due 2014 tendered in connection with its tender offer and consent solicitation.

The total for the 9% notes was determined based on a yield to the first redemption date equal to the sum of the yield of the 3.625% Treasury due July 15, 2009 and a fixed spread of 50 basis points.

The tender offer applies to the company's $150 million principal amount at maturity of second-priority senior secured floating-rate notes due 2010 issued in 2004 and $150 million principal amount at maturity of second-priority senior secured floating-rate notes due 2010 issued in 2005 in addition to the $325 million 9% notes. All of the notes were issued by Hexion U.S. Finance Corp. and Hexion Nova Scotia Finance, ULC.

The tender offer expiration was pushed back to 5 p.m. ET on Nov. 13 from Nov. 8. An associated solicitation of consents to eliminate most of the restrictive covenants and the liens in the note indentures ended on Oct. 24.

As of the consent solicitation expiration, the company had received tenders and consents for 100% of the principal amount of the notes.

For each $1,000 principal amount of the 2005 floaters, the company will pay $1,023. For each $1,000 principal amount of the 2004 floaters, the company will pay $1,022.50.

The tender considerations include a $30.00 consent payment for each $1,000 principal amount of notes. Noteholders will also receive interest accrued up to but excluding the payment date, which is expected to be Nov. 3.

Credit Suisse Securities (USA) LLC is the dealer manager (800 820-1653 or call collect 212 325-7596). D.F. King & Co., Inc. is the information agent (800 290-6426 or call collect 212 269-5550).

The tender offer is subject to Hexion obtaining the financing necessary to pay for the notes. Hexion added that it expects to enter into a new $2 billion term loan facility and a new $50 million synthetic letter-of-credit facility, which will replace its May 2006 term loan and synthetic letter-of-credit facilities.

Columbus, Ohio-based Hexion produces thermoset resins for the global wood and industrial markets.

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