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Momentive Specialty Chemicals Obtains Commitments for New $400MM ABL Facility

January 17, 2013, 07:32 AM

Momentive Specialty Chemicals announced that it has obtained commitments from financial institutions for a new $400 million asset-based revolving loan credit facility, subject to a borrowing base. The ABL facility will replace the company’s existing senior secured credit facilities and the company expects to enter into the ABL Facility as soon as practicable following the completion of a notes offering described below.

In the same release, the Ohio-based company announced  its wholly owned subsidiary Hexion U.S. Finance Corp is proposing to issue $1.1 billion aggregate principal amount of 6.625% First-Priority Senior Secured Notes due 2020 in a private offering that is exempt from the registration requirements of the Securities Act of 1933, as amended. The notes will be guaranteed on a senior secured basis by the company and by certain domestic subsidiaries of the company. The company previously issued $450 million aggregate principal amount of 6.625% First-Priority Senior Secured Notes due 2020 and the notes will constitute a single class of securities with such previously issued notes.

Prior to the company entering into the ABL Facility, the notes will be secured by first-priority liens, subject to certain exceptions, on certain of the company’s and the guarantors’ existing and future domestic assets and will rank pari passu in priority as to such collateral with the company’s senior secured credit facilities. After the company enters into the ABL Facility, the notes will have the benefit of a first-priority lien on certain notes priority collateral (which generally includes most of the assets of the company and the domestic subsidiaries of the company other than the ABL priority collateral) and a second-priority lien on the ABL priority collateral (which with respect to the company and its domestic subsidiaries generally includes the inventory and accounts receivable and related assets of such entities), in each case subject to certain exceptions.

The company intends to use the net proceeds from the offering of the Notes (i) to repay in full all of the approximately $913 million aggregate principal amount of term loans outstanding under the Company’s senior secured credit facilities, (ii) to purchase any and all of its outstanding $120 million aggregate principal amount of Second-Priority Senior Secured Floating Rate Notes due 2014 and (iii) to pay related fees and expenses and for general corporate purposes. The proposed offering of the Notes is subject to market and other conditions, and may not occur as described or at all.

View the company's full press release.

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