Momentive companies receive tenders for majority of notes in offers

By Angela McDaniels

Tacoma, Wash., Nov. 22 - Momentive Performance Materials Inc. and Momentive Specialty Chemicals Inc. announced the results of their tender offers that ended at 11:59 p.m. ET on Nov. 19.

Momentive Performance had received tenders for $450,592,000 of its 9¾% senior notes due 2014, €155,611,000 of its 9% senior notes due 2014 and $74,792,167 of its 10 1/8%/10 7/8% senior toggle notes due 2014 as of the early tender deadline, which was 5 p.m. ET on Nov. 4.

The company has since received tenders for an additional €165,000 of its 9% notes and $615 of its toggle notes.

Momentive Specialty received tenders for $355,241,000 of its 9¾% second-priority senior secured notes due 2014 by the early tender deadline and no additional notes after that time.

All notes tendered by the early tender deadline were accepted and purchased on Nov. 5.

For each $1,000 or €1,000 principal amount of notes, the purchase price is $1,053.75 for Momentive Performance's 9¾% notes, €1,050.00 for its 9% notes, $1,056.25 for its toggle notes and $1,053.75 for Momentive Specialty's 9¾% notes.

Each of these payouts includes a $10.00 or €10.00 early tender payment for notes tendered by the early tender date.

The companies also paid accrued interest up to but excluding the payment date.

The completion of the tender offers was conditioned on, among other things, the issuance of new senior debt.

When the tender offers began on Oct. 22, the companies said they planned to redeem any notes not tendered in the offers.

Momentive Performance said that when combined with the $234.3 million of its 9¾% notes, €88.2 million of its 9% notes, $139.4 million of its toggle notes and $127 million of Momentive Specialty's 9¾% notes owned by Apollo Management, LP, the tenders received represent 95.58%, 99.48%, 99.99% and 90.52% of the notes series, respectively.

Apollo agreed to exchange all of its notes for new debt at an exchange ratio determined based on the tender consideration offered to noteholders and intended to give Apollo a value equivalent to that which it would receive if it had received the total consideration in the tender offers and used the proceeds to invest in the new debt. The new debt has the same terms as the new notes issued by the company to finance the tender offers.

As announced in September, Momentive Performance Materials and Hexion Specialty Chemicals, Inc. agreed to merge. Affiliates of investment firm Apollo own a controlling interest in both Hexion and Momentive Performance, and Apollo indirectly controls Momentive Performance through its ownership of the stock of ultimate parent company Momentive Performance Materials Holdings LLC.

Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106), Credit Suisse Securities (USA) LLC (800 820-1653 or 212 325-5912) and J.P. Morgan Securities LLC (800 245-8812 or 212 270-1200) were the dealer managers for Momentive Performance's tender offer. Citigroup, Credit Suisse and J.P. Morgan Securities LLC (+44 20 7325 9633) were dealer managers for Momentive Specialty's offer.

Global Bondholder Services Corp. (212 430-3774 for brokers and banks or 866 470-4500 for all others) was the information agent.

Momentive Performance Materials is an Albany, N.Y.-based silicone and specialty materials company. Momentive Specialty Chemicals is based in Columbus, Ohio, and makes thermoset resins.

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