Momentive Performance Materials

Momentive Performance Materials and Zhejiang Xinan Chemical Plan Expansion of Joint Venture in China

Will Significantly Increase Siloxane Production to Meet Growing Demand for Silicone-based Products

Momentive Performance Materials Inc. (“MPM”), a leading global provider of silicones and advanced materials, and Zhejiang Xinan Chemical Industrial Group (“Zhejiang Xinan”　浙江新安化工集団), a major provider of agricultural chemicals and organic silicon products, today announced the planned expansion of manufacturing capacity by their joint venture company, Zhejiang Xinan Momentive Performance Materials Co., Ltd.

The joint venture company’s plant in Jiande, China, which has annual production capacity of approximately 50,000 metric tons of siloxane, successfully started its first phase of operations in the fourth quarter of 2010. With the expansion, siloxane production capacity is expected to triple to an estimated 150,000 metric tons per year, commencing in 2013. In connection with the planned expansion, Zhejiang Xinan and MPM will make capital contributions of approximately USD33 million and USD32 million, respectively, to the joint venture company for a total new investment of USD65 million. The joint venture company is owned 51 percent by Zhejiang Xinan and 49 percent by MPM.

“We are very pleased with the progress of our joint venture with Zhejiang Xinan Chemical Industrial Group,” John Dandolph, Senior Vice President and Managing Director ? Asia Pacific, said. “Our commitment to a second phase of this venture reflects both the success of this partnership and our continued focus on investing locally to help serve customers in this important region.”

“The start-up of Zhejiang Xinan Momentive demonstrates the early success of the dedicated cooperation and commitment of the two partners,” said Wang Wei, Chairman of the Board, Zhejiang Xinan Chemical Industrial Group. “The continued expansion is further proof that we both have high confidence and expectations for a bright future together.”

Siloxane is a key starting component in silicone production. Silicones are used in the manufacture of products in a wide range of industries, including automotive, construction, electronics, healthcare, personal care, power & utility and textiles.

About Momentive Performance Materials Inc.
Momentive Performance Materials Inc. is a global leader in silicones and advanced materials, with a 70+ year heritage of being first to market with performance applications for major industries that support and improve everyday life. The company delivers science-based solutions, by linking custom technology platforms to opportunities for customers. Momentive Performance Materials Inc. is an indirect wholly-owned subsidiary of Momentive Performance Materials Holdings LLC. Additional information is available at www.momentive.com.

About the New Momentive
Momentive Performance Materials Holdings LLC is the ultimate parent company of Momentive Performance Materials Inc. and Momentive Specialty Chemicals Inc. (collectively, the “new Momentive”). The new Momentive is a global leader in specialty chemicals and materials, with a broad range of advanced specialty products that help industrial and consumer companies support and improve everyday life. The company uses its technology portfolio to deliver tailored solutions to meet the diverse needs of its customers around the world. The new Momentive was formed in 2010 through the combination of entities that indirectly owned Momentive Performance Materials Inc. and Hexion Specialty Chemicals Inc. The company is controlled by investment funds affiliated with Apollo Global Management, LLC.

About Zhejiang Xinan
Zhejiang Xinan Chemical Industrial Group is located in China’s very developed Yangtze River delta area. It was established in 1965 and got listed on Shanghai Stock Exchange in September 2001 and is on China’s Manufacturer Top 500 and Global Agrichemical Top 20. The company developed along two core businesses: agricultural chemicals and silicone materials. Its silicone business is vertically integrated, including si-metal. The company is an industry leader and its products have won awards such as China Famous Brands and China Most Competitive Brands.

Apollo's Momentive Performance Materials Makes Chapter 11 Bankruptcy Filing
Move Follows Negotiations With Creditors on Debt Load

Momentive Performance Materials Inc., a silicone and quartz producer owned by Apollo Global Management, filed for Chapter 11 bankruptcy Sunday on the eve of a $60 million interest payment it couldn't afford to make.

The Chapter 11 filing in U.S. Bankruptcy Court in White Plains, N.Y., comes after the company had been in negotiations with creditors about restructuring its unmanageable debt load.

Chief Executive Craig O. Morrison said in a statement Sunday night that the company's "prenegotiated" plan with key creditors will allow it to slash more than $3 billion in debt off the company's books.

Earlier this month, Momentive said it was in active discussions with creditors about restructuring its debt.

In court filings, Momentive listed four separate groups of bondholders owed about $2.5 billion as its largest unsecured creditors. Among those creditors are Oaktree Capital Management LLC, GSO Capital Partners and Third Avenue Management.

Apollo's $3.8 billion buyout of New York-based Momentive in 2006 saddled the company with billions of dollars in debt ahead of a global financial crisis and subsequent recession.

Apollo, which bought Momentive from General Electric Co., is planning to retain a stake in the company, according to people familiar with the matter.

Momentive produces silicones, which are often used in coatings and adhesive for products including televisions, computer screens and hand-held devices.

The company intends to remain open during its restructuring and has lined up $570 million in bankruptcy financing from J.P. Morgan Securities LLC to pay its suppliers and employees during the bankruptcy case.

Momentive's Chapter 11 restructuring, which doesn't include Momentive Specialty Chemicals Inc., is being handled by the law firm of Willkie Farr & Gallagher LLP. The company's restructuring adviser is AlixPartners and its investment bank is Moelis &Co.

Silicones and quartz producer Momentive Performance Materials Inc. files for Chapter 11 to inmplement "Pre-Negotiated" balance sheet restructuring plan

Momentive Performance Materials Inc. (“MPM”), a global leader in the development and manufacture of silicones and products derived from quartz and specialty ceramics, today announced that it has entered into a Restructuring Support Agreement (“RSA”) with certain of its key stakeholders regarding the terms of a balance sheet restructuring plan that will strengthen the Company’s financial position by reducing long-term debt and enhancing liquidity. The key terms of the RSA include a $600 million rights offering, which will provide a significant equity infusion to the Company, along with the securing of commitments for $1.3 billion of exit financing. The RSA has been supported by holders owning approximately 85% of the company’s Second Lien Notes. To implement this “pre-negotiated” plan, MPM and its U.S. subsidiaries today voluntarily filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York in White Plains, NY.
All of MPM’s silicones and quartz businesses will continue to operate in the ordinary course throughout the Chapter 11 process. MPM’s operations outside the U.S. are not included in the Chapter 11 proceedings. The filing relates solely to MPM and not to Momentive Specialty Chemicals Inc. (MSC), which has a fully independent debt capital structure and a separate and strong balance sheet. MSC had liquidity of $773 million as of December 31, 2013 and has no material debt maturities prior to 2018.

“The actions we are announcing today represent an important and positive step forward in our efforts to strengthen MPM’s financial condition,” said Craig O. Morrison, Chairman, President and CEO of MPM. “With the support of certain of our key stakeholders, we intend to move quickly to implement our pre-negotiated balance sheet restructuring plan, which will eliminate more than $3 billion of debt from MPM’s balance sheet and result in post-emergence liquidity of more than $300 million and net debt of approximately $1.2 billion. This will free up additional cash flow that, among other things, can be invested in growth opportunities, capital expenditures, research and development and technology enhancements.”
Mr. Morrison continued, “Throughout the restructuring process, we intend to continue providing our customers with the high-quality products and service they expect from MPM. We have innovative technologies and product development capabilities, a global footprint, blue-chip customers and a world-class workforce supporting us as we move forward.”
In conjunction with the filing, MPM has received a commitment for $570 million in debtor-in-possession financing led by J.P. Morgan Securities LLC as lead arranger, consisting of a $300 million term loan and a $270 million ABL revolver that will be convertible to an exit facility at the Company’s option upon meeting certain conditions. Following Court approval, this financing, combined with cash generated by the Company’s ongoing operations, will be available to MPM to meet its operational and restructuring needs.

Momentive Performance Materials Inc. emerged from Chapter 11, the company announced on Friday.

The company said it emerged with liquidity of about $360 million after eliminating roughly $3 billion in debt via its Chapter 11 proceeding. The company said it would have about $1.2 billion of post-emergence pro forma debt.

As reported, several appeals remain to be resolved in the case regarding whether make-whole payments are due on the company’s first- and 1.5-lien notes ($1.1 billion of 8.875% first-priority senior notes due 2020 and $250 million of 10% senior secured notes due 2020, respectively), and whether holders of the notes are entitled to a market rate of interest in the cram-down replacement notes being issued to them under the company’s reorganization plan.

The White Plains, N.Y., bankruptcy court confirmed the company’s reorganization plan on Sept. 11.

As reported, under the company’s proposed plan, holders of the first- and 1.5-lien notes will receive replacement notes paying interest at fixed rates calculated at T+200 for first-lien noteholders, and T+275 for holders of the 1.5-lien notes, at the time of emergence.

As reported, in arriving at that cram-down interest rate, Bankruptcy Court Judge Robert Drain rejected the argument that holders were entitled to a market rate of interest and held that, under Supreme Court precedent, the cram-down interest rate need only equal a risk-free base rate plus a risk premium of 1%-3%. Drain’s ruling has proved controversial, however, because of his application of the Supreme Court precedent, which involved a Chapter 13 proceeding, to a Chapter 11 case.

Beyond the plethora of issues involving the senior debt, second-lien lenders ($1.161 billion of 9% second-priority springing lien notes due 2021 and €133 million 9.5% second-priority springing lien notes due 2021) are to receive all of the equity in the reorganized company (after giving effect to the subordination provision of the subordinated notes), along with participation rights in a $600 million rights offering at a price per share determined by using the pro forma capital structure and an enterprise value of $2.2 billion, applying a 15% discount to the equity value.

Korean chemical and auto parts manufacturer KCC is considering the acquisition of Momentive Performance Materials

KCC, South Korea's largest maker of building materials, said that it is considering acquiring U.S. silicone maker Momentive Performance Materials Inc.

Still, KCC said in a regulatory filing with the Financial Supervisory Service that "no specific decision has been made yet."

A KCC official said the possible acquisition is being examined, though he did not give any further details and asked not to be identified, citing policy.

Momentive is one of the world's largest producers of silicones and silicone derivatives, and a global leader in the development and manufacture of products derived from quartz and specialty ceramics.

KCC Corporation started out as Kaumkang State Industries. Ltd. In 1958 and for over half a century has been playing a leading role in technological innovation in building materials. such as glass. windows/doors, exterior/interior materiats. and flooring. We have also moved into the silicone business. an area ripe for the creation of high-value products in the fields of specialized paints and next-generation precision chemical engineering.

About KCC Corporation
Based in Seoul, South Korea, KCC Corporation is a leading chemicals manufacturer in Korea, specializing in paints, building materials and specialty materials. It also engages in the silicones business for developing products in the fields of specialized paints and precision chemical engineering. KCC Corporation was founded in 1958 and is headquartered in Seoul, South Korea.

About Wonik QnC Corporation
Wonik QnC Corporation manufactures and sells quartz and ceramic wares used in the production of semiconductor wafers. The company’s Quartz division provides quartz wares used in the production of semiconductor IC’s, as well as products used in the production of semiconductors, LCDs, LEDs, and solar cells. Its Ceramic division offers ceramics materials, including aluminum nitride, silicon carbide, and boron nitride composite. Wonik QnC Corporation was founded in 1983 and is headquartered in Gumi, South Korea.

About SJL Partners
SJL is a private equity investment manager focused on partnership investments with market-leading strategic companies to support their organic and inorganic growth, including bolt-on acquisitions. SJL’s portfolio includes investment into Celltrion Holdings, Korea’s leading biosimilar drug manufacturer, and Vigevano, one of the earliest distributors of leading fashion brands and leather goods in Korea.

BUILDING MATERIALS	Celling Materials, Insulation Materials, Gypsum Board
WINDOWS	PVC Windows, Curtain Wall, Solar Power
INTERIOR DECORATIVE	Flooring, Laminate Film
GLASS	Float Glass, Functional Glass, Automotive Glass
COATINGS	Decorative, General Industrial, Heavy-duty, Automotive, Plastic
HomeCC Interior	Stores (Incheon, Ulsan) Exhibition Stores HomeCC Interior Partner
SILICONE	Silane/Fluid, Emulsion, HTV, LSR, PSA/PRC
ADVANCED MATERIALS	Organic Materials, Inorganic Materials, Fiberglass