Hexion Files for Chapter 11 Bankruptcy
US thermoset resins producer Hexion voluntarily filed for Chapter 11 bankruptcy protection on Apr. 1 as part of a plan to reduce the company’s debt burden.
All US subsidiaries and one non-operating entity in Nova Scotia, Canada, are included in the filing; Hexion’s operations outside the US are not included.
The Ohio-headquartered group filed in the US Bankruptcy Court for the District of Delaware and said most of its debt holders have agreed to the restructuring plan. The company, whose major shareholder is private equity group Apollo Global Management, was reported to face $67 million in bondholder interest payments this month.
Hexion’s proposed restructuring plan comprises deleveraging of more than $2 billion, a rights offering that should provide $300 million of equity capital, a committed exit facility of more than $1.6 billion and full payment of the company’s trade creditors, employees and other general unsecured creditors.
According to ICIS newswire, the creditors with the largest unsecured claims include Blue Cube Operations at $7.04 million; Southern Chemical at $7.02 million; Mitsubishi at $5.85 million; OCI at $3.79 million; Dystar at $3.61 million; and Methanex at $3.55 million.
Hexion said the plan, which is subject to confirmation by the bankruptcy court, will eliminate a significant part of its debt and strengthen its competitive position. Chairman, president and CEO, Craig Rogerson, commented: “We believe that with a stronger balance sheet, Hexion will be better positioned to further invest in our specialty product portfolio and capitalize on positive industry growth trends and our market leading positions.”
Meanwhile, Hexion has received commitments for $700 million in debtor-in-possession (DIP) financing, some of which will pay off its asset-based revolving credit facility. The company expects that the DIP financing, together with cash generated by ongoing operations, will be sufficient to meet its global operational and restructuring needs during the bankruptcy process.