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Hexion exits bankruptcy protection

July 2, 2019
Chemical Value Chain

Hexion Inc. emerged from Chapter 11 bankruptcy protection 1 July, shedding more than $2 billion in debt. The company says it is now “well positioned to make substantial reinvestments into its businesses” as a result of a strengthened capital structure and lower interest expense.

The US Bankruptcy Court for the District of Delaware has approved the company’s reorganization plan last week. Hexion filed for bankruptcy protection on 1 April, citing net debt of $3.9 billion and bids that valued the company between $3.1 and $3.3 billion.

Hexion had sales of $3.7 billion and Ebitda of $425 million for the 12-month period ended 31 March. The restructuring plan cuts debt by roughly $2.2 billion and its debt-to-Ebitda ratio from 8.2 times to 3.5. First-lien bondholders hold about 72.5% of the company’s equity and other debt holders the remaining 27.5%. Hexion is expected to seek an initial public offering of shares later this year. It has raised $300 million through a rights offering and approximately $2.0 billion in exit financing.

Hexion’s forest products division is the largest global maker of formaldehyde-based resins and intermediates. Its epoxy, phenolic and coatings resins business has a number one or two positions in most key segments.

“We are moving forward with significantly less debt and greater financial flexibility, which enhances our competitive position and ability to create long-term value,” says Craig Rogerson, Hexion president and CEO. “As an appropriately capitalized market leader with substantial free cash flow generation capabilities and a lower interest burden, we will continue to enhance our value-creating platform by accelerating new product development.”

By Robert Westervelt

Source: Chemical Week

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