Momentive Performance Materials Inc.’s pre-negotiated Chapter 11 Reorganization, debt financing and equity financing

Date Announced:

Momentive Performance Materials Inc.

Closed – 10/2014

$4.2 billion Pre-negotiated Chapter 11 Reorganization; $570 million debt financing; $600 million equity financing Read the case study

Financial Advisor to Momentive Performance Materials on its $4.2 billion Pre-negotiated Chapter 11 Reorganization

On October 24, 2014, Momentive Performance Materials (“MPM”), one of the world’s largest producers of silicones, silicone derivatives and quartz products, successfully emerged from Chapter 11 Bankruptcy protection. Moelis & Company acted as financial advisor to MPM and was instrumental in initiating, evaluating and negotiating the transaction. Over the course of an intensive multi-party due diligence period, Moelis & Company evaluated and assisted in the development of the pro forma business plan, negotiated a fully committed equity rights offering and assisted in securing $570 million in DIP financing as well as exit financing at favorable terms. On April 13, 2014,
MPM entered into a Restructuring Support Agreement with holders of $1.3 billion of Second Lien Notes, the fulcrum security, under a pre-negotiated plan, and on September 10, 2014, MPM’s Plan of Reorganization was confirmed. Key terms included a $600 million fully committed rights offering, which was backstopped by approximately 90% of the holders of the Second Lien Notes, along with a 100% recovery to the holders of First Lien Senior Notes and Replacement Notes, trade creditors and other general unsecured creditors.

Moelis & Company played a pivotal role as lead witness in the landmark Bankruptcy Court decision on cram down interest rates based on the Supreme Court’s Till decision, providing expert testimony regarding the appropriate rate for the Replacement Notes. The Court largely found in favor of MPM, saving the estate hundreds of millions of dollars while providing long-term financing to fund its business operations and future growth.

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