Bankruptcy News

We've summarized the latest docket activity and news for publicly traded companies currently operating under U.S. Bankruptcy Court protection.

Bankruptcy/Chapter 11 / Bonds

Momentive Performance Materials Chapter 11 Petition Filed

Momentive Performance Materials (MPM) and eleven affiliated Debtors filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of New York, lead case number 14-22503 (MPM Silicones). The Company, which develops silicones and advanced materials derived from quartz and specialty ceramics, is represented by Matthew A. Feldman of Willkie Farr & Gallagher. The Company concurrently announced that it has entered into a restructuring support agreement (RSA) with certain of its key stakeholders regarding the terms of a balance sheet restructuring plan that will strengthen its financial position by reducing long-term debt and enhancing liquidity. Key terms of the RSA include a $600 million rights offering, which will provide a significant equity infusion to the Company, along with the securing of commitments for $1.3 billion of exit financing. The RSA has been supported by holders owning approximately 85% of the Company’s second lien notes. All of MPM’s silicones and quartz businesses will continue to operate in the ordinary course throughout the Chapter 11 process. The Company’s operations outside the U.S. are not included in the Chapter 11 proceedings; this filing relates solely to MPM and not to Momentive Specialty Chemicals, which has a fully independent debt capital structure and a separate and strong balance sheet. Craig O. Morrison, chairman, president and C.E.O. of MPM, “With the support of certain of our key stakeholders, we intend to move quickly to implement our pre-negotiated balance sheet restructuring plan, which will eliminate more than $3 billion of debt from MPM’s balance sheet and result in post-emergence liquidity of more than $300 million and net debt of approximately $1.2 billion. This will free up additional cash flow that, among other things, can be invested in growth opportunities, capital expenditures, research and development and technology enhancements.” In conjunction with the filing, the Company has received a commitment for $570 million in debtor-in-possession financing led by J.P. Morgan Securities as lead arranger, consisting of a $300 million term loan and a $270 million ABL revolver that will be convertible to an exit facility at the Company’s option upon meeting certain conditions. Following Court approval, this financing, combined with cash generated by ongoing operations, will be available to MPM to meet its operational and restructuring needs.

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