Hexion reorganization plan confirmed; emergence expected in early July

By Caroline Salls

Pittsburgh, June 24 – Hexion Inc.’s plan of reorganization was confirmed Monday by the U.S. Bankruptcy Court for the District of Delaware, according to a company news release.

Hexion said it expects to emerge from Chapter 11 in early July.

As previously reported, the company said the reorganized debtors intend to borrow under a new $350 million ABL and $1.2 billion term loan and issue $450 million in senior unsecured notes, which will give the reorganized debtors roughly $2 billion in debt financing upon emergence.

The company said these borrowings are necessary to fund plan distributions, to repay the company’s debtor-in-possession facilities and to allow the debtors to emerge from Chapter 11 with sufficient post-emergence liquidity.

Hexion filed bankruptcy to implement a restructuring support agreement reached with the majority of holders of its notes on the terms of a consensual financial deleveraging plan that will strengthen the company’s financial position and accelerate future growth.

The company said the plan will provide for a significant deleveraging of its capital structure by more than $2 billion, an infusion of $300 million in equity capital through a fully backstopped rights offering and a committed exit facility.

Trade creditors, employees and other general unsecured creditors will be paid in full.

Specifically, the company said holders of first-lien notes will receive $1.45 billion in cash, less the sum of adequate protection payments reflecting interest on the notes, as well as 72.5% of the new Hexion common shares and rights offering proceeds.

Holders of 1.5-lien notes and unsecured notes will receive a share of 27.5% of the new common shares and rights offering proceeds.

Holders of the debtors’ outstanding common equity will receive no recovery.

Latham & Watkins LLP is serving as legal counsel, Moelis & Co. LLC is serving as financial adviser, and AlixPartners, LLP is serving as restructuring adviser to Hexion.

Hexion, a Columbus, Ohio-based chemical company, filed bankruptcy on April 1. The Chapter 11 case number is 19-10684.

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