Momentive completes private exchange offers for four series of notes

By Angela McDaniels

Tacoma, Wash., June 10 - Momentive Performance Materials Inc. announced the results of its private offers to issue up to $200 million principal amount of new 12½% second-lien senior secured notes due 2014 in exchange for four series of notes. The offer expired on June 9.

The company said it received tenders for $121 million, or 16%, of its $765 million outstanding principal amount of 9¾% senior notes due 2014 and plans to accept for exchange $48.4 million of these notes.

Holders tendered €45 million, or 16%, of its €275 million outstanding principal amount of 9% senior notes due 2014, and Momentive will accept €29.8 million.

The company plans to accept $140.9 million of the $173 million principal amount of 10 1/8% - 10 7/8% in kind - senior toggle notes due 2014 tendered. The amount tendered represents 52% of the $333,513,000 outstanding principal amount.

Holders tendered $174 million, or 35%, of Momentive's $500 million outstanding principal amount of 11½% senior subordinated notes due 2016, $118.1 million of which will be accepted for exchange.

The amount of new notes to be issued for each $1,000 principal amount of old notes was determined using a modified Dutch auction procedure.

Holders who tendered by 5 p.m. ET on May 26, the early tender date, will receive an early delivery payment, which will be made in the form of new notes.

Momentive said it expects to accept all notes tendered below the clearing price of $625 principal amount of new notes per $1,000 principal amount of old senior notes and $400 principal amount of new second-lien notes per $1,000 principal amount of old subordinated notes.

The principal amount of any 9% notes has been converted into dollars at the rate of 1.4079 dollars per euro.

All old notes tendered at the applicable clearing price will be subject to proration. The proration factor will be about 23.76% for the senior notes and about 48.28% for the subordinated notes.

The company previously said no more than $50 million of new notes would be issued in exchange for 11½% notes.

The exchange offers began May 12, and the settlement date is expected to be June 15.

The new notes will be guaranteed on a senior secured basis by each of Momentive's U.S. subsidiaries that is a guarantor under the company's senior secured credit facilities and secured by a second-priority security interest in some assets of Momentive and the guarantors.

The exchange offers were made only in the United States to noteholders who are both qualified institutional buyers and U.S. persons and outside the United States to persons other than U.S. persons who are non-U.S. qualified offerees.

When the offer began, Apollo Management, LP, the controlling shareholder of Momentive, owned roughly $47 million principal amount of the 11½% notes and $167 million total principal amount of the other three series of notes.

The dealer manager was J.P. Morgan Securities Inc. The information agent was Global Bondholder Services Corp. (866 794-2200 or 212 430-3774).

Momentive is an Albany, N.Y.-based provider of high-technology materials services to the silicones, quartz and ceramics markets.

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