Hexion Specialty Chemicals traded up half-a-point to par after the company announced it would be entering into a new $2 billion term loan and a new $50 million synthetic letter of credit facility. These will replace the $1.625 billion term loan and synthetic letter of credit facilities it entered into in May. The term loan has been trading under par in the 98-99 context since the middle of June. Its low coupon of 2%, relative to similar credits, was blamed for the drop (CIN, 6/23). The term loan, led by JPMorgan, Citigroup, and Credit Suisse, broke at 100 1/4 in the secondary market last May.
Hexion is offering to purchase the outstanding $150 million principal amount of senior secured floating rate notes due 2010 and any or all of its outstanding $325 million 9% '14 notes. It expects to raise $835 million of senior secured debt in connection with its offer to purchase the notes. Hexion intends to use $500 million of the additional cash available under its new credit facilities and from the secured debt financing to pay a common stock dividend to its shareholders and to pay for the notes repurchased in the tender offers. A Hexion spokesman did not return a call.