Hexion sets pricing in tender for Hexion, Huntsman notes

By Jennifer Chiou

New York, Oct. 24 - Hexion Specialty Chemicals, Inc. announced pricing in the tender offers and consent solicitations for some of its own notes and those of Huntsman International LLC.

The offers, which began on Oct. 8, are being made through Hexion's subsidiary, Nimbus Merger Sub Inc., and cover any and all of:

• Hexion U.S. Finance Corp. and Hexion Nova Scotia Finance, ULC's $200 million of second-priority senior secured floating-rate notes due 2014;

• Hexion U.S. Finance and Hexion Nova Scotia Finance's $625 million of 9¾% second-priority senior secured notes due 2014;

• Huntsman's $296.01 million 11 5/8% senior secured notes due 2010;

• Huntsman's $198 million 11½% senior notes due 2012;

• Huntsman's $175 million 7 3/8% senior subordinated notes due 2015;

• Huntsman's €135 million 7½% senior subordinated notes due 2015;

• Huntsman's $347 million 7 7/8% subordinated notes due 2014; and

• Huntsman's €400 million 6 7/8% subordinated notes due 2013.

For each $1,000 principal amount and assuming a Nov. 6 payment date, the payment on offer and the calculation on the payout is as follows:

• $1,021.49 for Hexion's floating-rate notes: a yield to the notes' first call date based on the yield on the 4¾% U.S. Treasury note due Nov. 15, 2008 plus 50 basis points;

• $1,203.40 for Hexion's 9¾% senior secured notes: a yield to the notes' first call date based on the yield on the 4½% U.S. Treasury note due Nov. 15, 2010 plus 50 bps;

• $1,034.06 for Huntsman's 11 5/8% senior secured notes;

• $1,062.50 for Huntsman's 11½% senior notes;

• $1,096.64 for Huntsman's 7 3/8% notes: a yield to the notes' first call date based on the yield on the 3¼% U.S. Treasury note due Dec. 31, 2009 plus 50 bps;

• €1,083.97 for Huntsman's 7½% senior subordinated notes: a yield to the notes' first call date based on the yield on the 5 3/8% German Bund due Jan. 4, 2010 plus 50 bps;

• $1,157.27 for Huntsman's 7 7/8% subordinated notes: a yield to the notes' first call date based on the yield on the 4½% U.S. Treasury note due Nov. 15, 2010 plus 50 bps; and

• €1,086.30 for Huntsman's 6 7/8% subordinated notes: a yield to the notes' first call date based on the yield on the 5 3/8% German Bund due Jan. 4, 2010 plus 50 bps.

The total amounts include a consent payment of $15.00 per $1,000 or €15.00 per €1,000 that will only be paid to holders who tendered with consents by the consent date of Oct. 22. Holders who tender are required to deliver consents.

Nimbus will also pay accrued interest up to but excluding the payment date.

In addition to the tender offers, Nimbus is soliciting consents to eliminate most of the restrictive covenants and the liens, as applicable, in the various note indentures. The company already announced the receipt of the needed consents to amend the indentures.

The company also said it executed supplemental indentures for the notes.

As of 5 p.m. ET on Oct. 22, the company said it had received tenders from holders of 86.06% of the second-priority floaters, 96.13% of the 9¾% second-priority notes, 96.42% of the 11 5/8% notes, 99.53% of the 11½% notes, 98.65% of the 7 3/8% notes, 98.94% of the 7½% notes, 97.49% of the 7 7/8% notes and 92.63% of the 6 7/8% notes.

As already reported, the tenders are subject to conditions, including completion of Hexion's proposed acquisition of Huntsman and the related financing transactions and the receipt of consents for a majority of the notes issued under each indenture.

The release of liens under the indentures will require consents for two-thirds of the notes for Hexion's debt and all noteholders for Huntsman's 11 5/8% notes.

The offers end at midnight ET on Nov. 5.

Hexion previously said it expects its 9.2% debentures due 2021, 7 7/8% debentures due 2023 and 8 3/8% sinking fund debentures due 2016 will remain outstanding.

Oppenheimer & Co. Inc. is dealer manager (800 274-2746 or call collect 212 885-4646). D.F. King & Co., Inc. is information agent (800 290-6426 or call collect 212 269-5550).

Hexion is a Columbus, Ohio, maker of thermoset and specialty products for wood and industrial markets. It is controlled by an affiliate of Apollo Management, LP.

Huntsman is a Salt Lake City manufacturer of differentiated chemicals and pigments.

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