Momentive's silicone group may enter bankruptcy

ERJ staff report (RPN)

Strongsville, Ohio – Momentive Performance Materials Inc. may file for US Chapter 11 bankruptcy protection sometime in April, reported Miles Moore of Rubber & Plastics News, according to the company’s latest filing with the US Securities and Exchange Commission (SEC).

In a filing lodged with the SEC on 1 April, Momentive said it could not file its 10-K annual report as scheduled for the period ending 31 December 31, 2013, because management needed “additional time to analyse and finalise the Company’s financial statements.

“A filing under Chapter 11 of the US Bankruptcy Code may provide the most expeditious manner in which to effect a plan of reorganisation,” Momentive said in the 1April filing. “However, there can be no assurance that an agreement can be reached with the company’s stakeholders, or that any transactions with the company’s stakeholders will be consummated.”

Momentive’s survival over the next year is seriously in doubt, although the company is in compliance with all the indentures governing its outstanding notes and credit agreements, it said.

Purchased by Apollo Global Management in 2006 in a $3.8 billion (€2.8 billion) leveraged buyout, Momentive — which is the former General Electric Silicones business — found itself saddled with extra debt just before the 2008 recession, which created an oversupply in the silicone markets Momentive supplies.

Currently Momentive, its holding company and its creditors are negotiating to restructure the company’s $4.4 billion (€3.2 billion) debt.

According to the SEC filing, Momentive expects to report a net loss of $465m (€338m) in 2013 on sales of just less than $2.4 billion (€1.7 billion), compared with a $365m (€265m) loss in 2012 on sales of $2.36 billion (€1.71 billion).

Momentive’s affiliate, Momentive Specialty Chemicals Inc., is solvent and won’t be part of the bankruptcy proceeding. Momentive Specialty Chemicals is the former Hexion Specialty Chemicals Inc.

In a separate statement, officials with Momentive Specialty Chemicals said that their Columbus, Ohio-based unit “has a separate and strong balance sheet and operates independently of MPM.” 

MSC ranks as one of North America’s largest producer of epoxy and phenolic thermoset resins. An MSC spokesman said April 4 that customers who buy those products from MSC will not be affected by MPM’s financial situation.

In 2013, MSC posted sales of almost $4.9 billion (€3.6 billion), up almost 3 percent versus 2012. Epoxy, phenolic and coating resins accounted for almost 64 percent of MSC’s 2013 sales.