Hexion disclosure statement approved; plan hearing set for June 24

By Sarah Lizee

Olympia, Wash., May 22 – Hexion Inc. obtained court approval of the disclosure statement for its financial deleveraging plan as well as the solicitation procedures, according to an order filed Wednesday in the U.S. Bankruptcy Court for the District of Delaware.

The plan confirmation hearing is scheduled for June 24.

As previously reported, 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 Chapter 11 filing also includes substantially all of Hexion’s U.S. subsidiaries and one non-operating entity based in Nova Scotia.

All of Hexion’s global business segments are continuing to operate as normal, and Hexion’s operations outside the United States are not included in the Chapter 11 proceedings.

Under the restructuring support agreement, creditors representing all tranches of the company’s notes agreed to support confirmation of a pre-packaged plan of reorganization.

Hexion 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 of more than $1.6 billion.

The company’s 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.

Hexion has received commitments for $700 million in debtor-in-possession financing, a portion of which will be used to pay off its asset-based revolving credit facility.

Following court approval, the company said this financing, combined with cash generated by ongoing operations, is expected to be available and sufficient to meet its operational and restructuring needs on a global basis.

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

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