Hexion sets Thursday launch for $675 million credit facility

By Sara Rosenberg

New York, April 26 - Hexion Specialty Chemicals Inc. is scheduled to hold a bank meeting on Thursday to launch its proposed $675 million senior secured credit facility, according to a market source.

J.P. Morgan Securities Inc., Credit Suisse First Boston and Citigroup are joint bookrunners and joint lead arrangers on the deal, with JPMorgan Chase Bank also acting as administrative agent, Citigroup as syndication agent and CSFB as documentation agent.

The facility consists of a $400 million seven-year term loan and a $275 million six-year revolving credit facility, with both tranches talked at Libor plus 225 basis points.

There is also a $200 million accordion feature contained in the credit agreement.

The credit facility is being obtained in connection with Apollo Management Group LP's acquisition of Bakelite AG from German chemical maker Ruetgers AG. Bakelite will be combined with Columbus, Ohio-based Borden Chemical Inc., which is already owned by Apollo, Resolution Specialty Materials Inc. and Resolution Performance Products Inc. to form a new company called Hexion.

In conjunction with the mergers, Hexion will come to market with an $800 million initial public offering of common stock.

Proceeds from the term loan will be used to repay portions of debt of the predecessor units that Apollo is forming into Hexion.

Revolver borrowings will be available for working capital and other general corporate purposes.

Within the revolver are a $30 million U.S. subsidiary swingline loan facility and a letter-of-credit subfacility of at least $150 million.

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