US Hexion files for bankruptcy protection

HOUSTON (ICIS)–US-based Hexion filed for bankruptcy protection under chapter 11 on Monday after it reached a deal with most of its creditors, it said.

The company estimated that both its assets and liabilities are worth $1bn-10bn.

The creditors with the largest unsecured claims include Blue Cube Operations at $7.04m; Southern Chemical at $7.02m; Mitsubishi at $5.85m; OCI at $3.79m; Dystar at $3.61m; and Methanex at $3.55m. Financial institutions had larger claims that were partially secured.

All of Hexion’s global segments are continuing to operate normally, and the filing should not affect its operations outside of the US, the company said.

Hexion’s proposed restructuring support agreement (RSA) calls for the following:

– De-leveraging of over $2bn. This will cut down the company’s debt.

– A rights offering that should provide the company with $300m in equity capital.

– A committed exit facility worth more than $1.6bn.

– Full payment of Hexion’s trade creditors, employees and other general unsecured creditors.

The RSA still needs confirmation from the bankruptcy court. Hexion said the proposal will eliminate a significant part of the company’s debt while putting it in a better competitive positions.

Meanwhile, Hexion has received commitments for $700m in debtor-in-possession (DIP) financing, it said. Companies use DIP financing to help fund their operations while they are under bankruptcy protection.

“We believe that with a stronger balance sheet, Hexion will be better positioned to further invest in our specialty product portfolio and capitalise on positive industry growth trends and our market leading positions,” said CEO Craig Rogerson.

Hexion makes epoxy resins and other thermoset resins.

The company filed for bankruptcy protection in US Bankruptcy Court, Delaware District Court. The case number is 19-10684.

The photo above shows courthouse steps. Image by Shutterstock