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What you need to know for 04/27/2017

Waterford-based Momentive eyes Chapter 11

Waterford-based Momentive eyes Chapter 11

Momentive Performance Materials is close to finalizing a plan that would keep one of the region’s la
Waterford-based Momentive eyes Chapter 11
Momentive Performance Material is on the verge of filing for bankruptcy protection. Pictured on Monday is the Waterford plant at 260 Hudson River Road.
Photographer: Marc Schultz

Momentive Performance Materials is close to finalizing a plan that would keep one of the region’s largest employers in business for the long term, a company spokesman said Monday.

The Waterford-based silicone and quartz producer reported last week that it is considering filing for Chapter 11 bankruptcy protection because that could be the “most expeditious manner” of reorganizing the company’s capital structure and reducing its debt, according to an April 1 filing with the U.S. Securities and Exchange Commission.

Momentive was unable to file its 2013 annual report to the SEC by the March 31 deadline, stating it needed additional time to analyze and finalize its financial statements. In the April 1 report, it said it is in “active discussions with various stakeholders” regarding ways to reorganize.

“The company has concluded there is substantial doubt about its ability to continue as a going concern for the next 12 months and expects that the audit report by its independent public accounting firm will contain an explanatory paragraph expressing substantial doubt about the company’s ability to continue as a going concern,” the company said in the filing.

Momentive added that it expects to report net sales of nearly $2.39 billion for 2013, compared with about $2.36 billion in 2012. It also expects to report a net loss of about $465 million for 2013, compared with a net loss of $365 million in 2012.

Momentive spokesman John Kompa said the company has substantial institutional debt that has become difficult to pay because of weakening demand and overcapacity in its industry sector.

“While there are several paths this process may take, any actions we may take are not expected to have an adverse effect on [Momentive Performance Materials’] ongoing ordinary-course operations in the U.S. or anywhere else around the world.”

The Wall Street Journal reported the company is working with creditors, including Oaktree Capital Management LLC, GSO Capital Partners and Third Avenue Management, to negotiate a plan to restructure $4.4 billion in debt as it is apparently unable to make an upcoming interest payment of about $60 million. The restructuring is expected to cut its debt load to about $1.3 billion, according to the report.

None of these actions would affect Momentive Specialty Chemicals Inc., another operating company owned by parent company Apollo Global Management.

Momentive Performance dates back 70 years. It originally was part of General Electric Co.’s advanced materials unit, but GE sold it in 2006 to Apollo. Four years later, Apollo combined Momentive Performance and Hexion Specialty Chemicals Inc. (now Momentive Specialty Chemicals Inc.) into one company called Momentive, but kept their capital and legal entity structures and respective subsidiaries separate.

Momentive Performance employs about 100 people at its corporate headquarters in Colonie and about 1,000 people at its Waterford plant. The Waterford employees have been rocked by temporary furloughs, wage rollbacks and labor unrest in the past, but Kompa said the restructuring should not affect staffing levels.

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