Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 19, 2019
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13015469&doc=3 
HEXION INC.
(Exact Name of Registrant as Specified in Its Charter)
 
New Jersey
(State or Other Jurisdiction of Incorporation)
 
 
1-71
13-0511250
(Commission File Number)
(I.R.S. Employer Identification No.)
 
 
180 East Broad Street, Columbus, Ohio
43215-3799
(Address of Principal Executive Offices)
(Zip Code)

614-225-4000
(Registrant's Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
None
 
None
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company  o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o





Item 7.01 Regulation FD Disclosure
On July 19, 2019, Hexion Inc. (the “Company”), Hexion Holdings LLC, Hexion LLC and certain of the Company's subsidiaries (collectively, the "Debtors") filed a monthly operating report for the period from June 1, 2019 to June 30, 2019 (the “Monthly Operating Report”) with the United States Bankruptcy Court for the District of Delaware, (the "Bankruptcy Court"). The Bankruptcy Court has had jurisdiction over the reorganization proceedings under Chapter 11 (“Chapter 11”) of the U.S. Bankruptcy Code (the “Bankruptcy Code”) for the Debtors since April 1, 2019. A copy of the Monthly Operating Report is attached as Exhibit 99.1 to this report.
The information set forth in this Item 7.01 and the attached Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities in that section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.
Cautionary Statement Regarding Financial Operating Data
The Company cautions investors and potential investors not to place undue reliance upon the information contained in the Monthly Operating Report, which was not prepared for the purpose of providing the basis for an investment decision relating to any of the Company’s securities. The Monthly Operating Report is limited in scope, covers a limited time period, does not reflect the Company’s international businesses that are not part of the Chapter 11 proceedings, and has been prepared solely for the purpose of complying with the monthly reporting requirements of the Office of the United States Trustee. The Monthly Operating Report was not audited or reviewed by independent accountants, is in a format prescribed by applicable requirements of the Office of the United States Trustee and is subject to future adjustment and reconciliation. There can be no assurance that, from the perspective of an investor or potential investor in the Company’s securities, the Monthly Operating Report contains any information beyond that required by the Office of the United States Trustee. The Monthly Operating Report also contains information for periods that are shorter or otherwise different from those required in the Company’s reports pursuant to the Exchange Act, and such information might not be indicative of the Company’s financial condition or operating results for the period that would be reflected in the Company’s financial statements or in its reports pursuant to the Exchange Act. Results set forth in the Monthly Operating Report should not be viewed as indicative of future results.
Item 9.01        Financial Statements and Exhibits
(d) Exhibits
Exhibit 99.1
Monthly Operating Report for the Period from June 1, 2019 to June 30, 2019






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
HEXION INC.
 
 
 
 
Date:
 
July 19, 2019
 
By:
 
/s/  George F. Knight
 
 
 
 
 
 
George F. Knight
 
 
 
 
 
 
Executive Vice President and Chief Financial Officer






EXHIBIT INDEX
Exhibit
Description
99.1



Exhibit



UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE

In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19



MONTHLY OPERATING REPORT

File with the Court and submit a copy to the United States Trustee within 20 days after end of the month. Submit copy of report to any official committee appointed in the case.
REQUIRED DOCUMENTS
Form No.
Document Attached
Explanation Attached
Schedule of Cash Receipts and Disbursements
MOR-1
x
 
Bank Reconciliations (or copies of debtor's bank reconciliations)
MOR-1a
 
See Attestation
Schedule of Retained Professional Fees Paid
MOR-1b
x
 
Copies of bank statements
 
 
x
Cash disbursements journals
 
 
x
Statement of Operations
MOR-2
x
 
Balance Sheet
MOR-3
x
 
Status of Postpetition Taxes
MOR-4
 
See Attestation
Copies of IRS Form 6123 or payment receipt (See Notes to MOR)
 
 
x
Copies of tax returns filed during reporting period (See Notes to MOR)
 
 
x
Summary of Unpaid Post-Petition Debts (See Notes to MOR)
MOR-4
x
 
Listing of Aged Accounts Payable (See notes to MOR)
MOR-4
 
x
Accounts Receivable Reconciliation and Aging (See Notes to MOR)
MOR-5
 
x
Debtor Questionnaire
MOR-6
x
 

I declare under penalty of perjury (28 U.S.C Section 1746) that this report and the attached documents are true and correct to the best of my knowledge and belief.


/s/ George F. Knight      
 
July 19, 2019
Signature of Authorized Individual*
 
Date

George F. Knight      
Printed Name of Authorized Individual

Director, Executive Vice President and Chief Financial Officer and Manager, Hexion Holdings LLC
Title

*Authorized individual must be an officer, director or shareholder if debtor is a corporation; a partner if debtor is a partnership; a manager if debtor is a limited liability company.

1



MOR NOTES
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


Notes to the Monthly Operating Report

General:

The report includes activity from the following Debtors and related Case Numbers:

Debtor Name
Case No.
Hexion Holdings LLC
19-10684
Hexion LLC
19-10685
Hexion 2 U.S. Finance Corp.
19-10686
Hexion Inc.
19-10687
Hexion HSM Holdings LLC
19-10688
Lawter International Inc.
19-10689
Hexion CI Holdings Company (China) LLC
19-10690
Hexion Investments Inc.
19-10691
Hexion Nimbus Inc.
19-10692
Hexion International Inc.
19-10693
Hexion Nimbus Asset Holdings LLC
19-10694
North American Sugar Industries Incorporated
19-10695
Hexion Deer Park LLC
19-10696
Cuban-American Mercantile Corporation
19-10697
Hexion VAD LLC
19-10698
The West India Company
19-10699
NL Coop Holdings LLC
19-10700
Hexion Nova Scotia Finance, ULC
19-10701

This Monthly Operating Report ("MOR") is unaudited and has been prepared solely for the purpose of complying with the Debtors' obligations to provide monthly operating reports currently during these Chapter 11 Cases. This MOR is not prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and does not include all of the information and footnotes required by U.S. GAAP. The Debtors have prepared this Monthly Operating Report using the best information presently available to them, which has been collected, maintained, and prepared in accordance with their historical accounting practices. This Monthly Operating Report is, thus, true and accurate to the best of the Debtors’ knowledge, information and belief based on current available data.

General Methodology: The Debtors prepared this Monthly Operating Report relying primarily upon the information set forth in their books and records. Consequently, certain transactions that are not identified in the normal course of business in the Debtors’ books and records may not be included in this Monthly Operating Report. Additionally, the information furnished in this report includes primarily normal recurring adjustments, but does not include all the adjustments that would typically be made for the quarterly and annual consolidated financial statements to be in accordance with U.S. GAAP. No entry for the equity interest in earnings of unconsolidated entities is included in these financial statements. Furthermore, the monthly financial information contained herein has not been subjected to the same level of accounting review and testing that the Debtors apply in the preparation of their quarterly and annual consolidated financial information in accordance with U.S. GAAP. Accordingly, upon the application of such procedures, the Debtors believe that the financial information may be subject to change, and these changes could be material. Nevertheless, in preparing this Monthly Operating Report, the Debtors made best efforts to supplement the information set forth in their books and records with additional information concerning transactions that may not have been identified therein.


2



MOR NOTES
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


As a result of the Chapter 11 Cases, the payment of prepetition indebtedness is subject to compromise or other treatment under a plan of reorganization. Generally, actions to enforce or otherwise effect payment of pre-Chapter 11 liabilities are stayed. Although prepetition claims are generally stayed, at hearings held on April 2, 2019 and May 1, 2019, the Bankruptcy Court granted interim and/or final approval of the Debtors’ “first day” motions generally designed to stabilize the Debtors’ operations. The Debtors received Bankruptcy Court approval to pay or otherwise honor certain prepetition obligations such as certain employee wages and benefits, certain taxes and fees, obligations to customers and logistics providers and prepetition amounts owed to certain critical vendors.

The results of operations contained herein are not necessarily indicative of results that may be expected from any other period or for the full year and may not necessarily reflect the consolidated results of operations, financial position and cash flows of the Debtors in the future. Intercompany transactions have not been eliminated in the financial statements.

For the reasons discussed above, the Debtors caution readers not to place undue reliance upon information contained in this MOR. For further information, refer to the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, as filed with the United States Securities and Exchange Commission. Hexion Holdings LLC is the sole shareholder of Hexion LLC, who is the sole shareholder of Hexion Inc. Hexion Holdings LLC and Hexion LLC are not included in the consolidated financial statements of Hexion Inc. included on Forms 10-K or 10-Q.

Reservation of Rights: Given the complexity of the Debtors’ business, inadvertent errors, omissions or over inclusion of contracts or leases may have occurred. Accordingly, the Debtors hereby reserve all of their rights to dispute the validity, status, enforceability, or executory nature of any claim amount, representation or other statement in this Monthly Operating Report and reserve the right to amend or supplement this Monthly Operating Report, if necessary.


General Notes:

On April 1, 2019, Hexion Inc. (the “Company”), Hexion Holdings LLC, Hexion LLC (“Holdings”) and certain of the Company’s subsidiaries (collectively, the “Debtors”) filed voluntary petitions (the "Bankruptcy Petitions") for reorganization under Chapter 11 ("Chapter 11") of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Chapter 11 proceedings are being jointly administered under the caption In re Hexion Holdings LLC, No. 19-10684 (the “Chapter 11 Cases”).

On June 25, 2019, the Court entered an order (the “Confirmation Order”) confirming the Second Amended Joint Chapter 11 Plan of Reorganization of Hexion Holdings LLC and its Debtor Affiliates under Chapter 11 of the Bankruptcy Code. On July 1, 2019 (the “Effective Date”), in accordance with the terms of the Plan and the Confirmation Order, the Plan became effective and all Debtors with the exception of Hexion Holdings LLC and Hexion LLC emerged from bankruptcy (the “Emergence”).
    
Additional information about the Chapter 11 Cases, court filings and claims information is available on the internet at https://hexionrestructuring.com/.


Notes to MOR-1

Cash is received and disbursed by the Debtors as described in the Debtors' motion to approve continued use of their cash management system (which motion was granted on an interim and final basis pursuant to orders entered by the Bankruptcy Court on April 2, 2019 and May 1, 2019, respectively) and is consistent with the Debtor's historical cash management practices.

Cash receipts related to intercompany transfers among the Debtors are deducted from cash receipts and disbursements.

During the reporting period, payments in Canadian Dollars were disbursed by Hexion Canada Inc. to Canadian domiciled payees on behalf of the Debtors. Hexion Canada Inc. was reimbursed by the Debtors through intercompany disbursements.



3



MOR NOTES
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


Notes to MOR-2 and MOR-3:

This Monthly Operating Report ("MOR") has been prepared on a consolidating basis for the Debtors. The financial information contained within the Monthly Operating Report is unaudited, limited in scope, covers a limited time period, and has been prepared solely for the purpose of complying with the monthly reporting requirements for Chapter 11 debtors as required by the Bankruptcy Court and is in a format acceptable to the United States Trustee for the District of Delaware (the "U.S. Trustee").

The MOR Statement of Operations includes the monthly period beginning June 1, 2019 and ending June 30, 2019 and the cumulative period beginning April 1, 2019 and ending June 30, 2019. As discussed below, this MOR is not prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and does not include all of the information and footnotes required by U.S. GAAP. Therefore, there can be no assurance that the financial information presented herein is complete, and readers are strongly cautioned not to place undue reliance on the MOR.

Debtor-in-Possession Financing
 
DIP Term Loan Facility

In connection with the filing of the Bankruptcy Petitions, on April 3, 2019, the Company entered into a New York law-governed senior secured term loan agreement (the “DIP Term Loan Facility”), among Hexion LLC (“Holdings”), the Company, Hexion International Holdings B.V. (the “Dutch Borrower”), which was amended on April 17, 2019, the lenders party thereto and JPMorgan Chase Bank, N.A. (“JPMorgan”), as administrative agent and collateral agent (the “Term Loan Agent”), which was amended on April 17, 2019. The proceeds of the DIP Term Loan Facility were loaned by the Dutch Borrower to the Debtors pursuant to an intercompany loan agreement (the “Intercompany Loan Agreement”) and were used in part to repay in full the outstanding obligations under the Debtor’s existing asset-based revolving credit agreement ABL Facility (“ABL Facility”).

The amount committed and made available under the DIP Term Loan Facility was $350 million. The DIP Term Loan Facility bore interest based on, at the Company’s option, an adjusted LIBOR plus 2.75%. For further information, refer to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, as filed with the United States Securities and Exchange Commission.

The Company’s remaining obligations under the DIP Term Loan Facility were repaid in full and the DIP Term Loan Facility was terminated upon consummation of the Plan by the Company on July 1, 2019.

DIP ABL Facility

In connection with the filing of the Bankruptcy Petitions, on April 3, 2019, Holdings, the Company and certain of its subsidiaries (collectively, the “Borrowers”), the lenders party thereto, JPMorgan, as administrative agent, and JPMorgan, as collateral agent (the “DIP ABL Collateral Agent” and together with the DIP Term Loan Facility, the “DIP Credit Facilities”), entered into an amended and restated senior secured debtor-in-possession asset-based revolving credit agreement, which was further amended on May 10, 2019 (the “DIP ABL Facility”), which amended and restated the Company’s ABL Facility among Holdings, the Company, the Borrowers, the lenders party thereto, JPMorgan, as administrative agent, and JPMorgan, as collateral agent.

Availability under the DIP ABL Facility was $350 million. The DIP ABL Facility bore interest based on, at the Company’s option, an adjusted LIBOR rate plus an applicable margin of 2.00% to 2.50% based on excess availability or an alternate base rate plus an applicable margin of 1.00% to 1.50% based on excess availability. For further information, refer to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, as filed with the United States Securities and Exchange Commission.
    
The Company’s remaining obligations under the DIP ABL Facility were repaid in full and the DIP ABL Facility was terminated upon consummation of the Plan by the Company on July 1, 2019.
    

4



MOR NOTES
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


Credit Facilities

ABL and Term Loan Facility    

On the Effective Date, the Company entered into a new $350 million ABL Facility and a new $1,200 million senior secured Term Loan Facility (together with the ABL Facility, the “Credit Facilities”). The Term Loan Facility consists of (i) a USD denominated tranche in an aggregate principal amount of $725 million and (ii) a EUR denominated tranche in an aggregate principal amount equal to €425 million. The ABL Facility will mature on July 1, 2024 and the Term Loan Facility will mature on July 1, 2026.

Senior Notes

On the Effective Date, the Company entered into an indenture (the “Indenture”), among the Company, the subsidiary guarantors party thereto and Wilmington Trust, National Association, as trustee, and issued $450 million aggregate principal amount of its 7.875% Senior Notes due 2027 (the “Senior Notes”) thereunder. The Senior Notes are guaranteed on a senior basis by the Company’s existing domestic subsidiaries that guarantee its obligations under its Credit Facilities (as defined above) (the “Guarantors”) on a full and unconditional basis. The Senior Notes will mature on July 15, 2027.

For further information, refer to the Company's Current Report on Form 8-K as filed with the United States Securities and Exchange Commission on July 2, 2019.

New Common Stock

On the Effective Date all previously issued and outstanding equity interests in Hexion Holdings LLC were cancelled. Upon effectiveness of the Plan, Hexion Holdings Corporation issued 58,410,731 shares of a new class of common stock, par value $0.01 per share (“New Common Stock”), including shares of New Common Stock issued as commitment premium. In addition, upon effectiveness of the Plan, Hexion Holdings Corporation issued 10,307,778 warrants to purchase shares of New Common Stock.


Notes to MOR-4:

The Debtors have received approval to pay pre-petition taxes and fee obligations, including, without limitation, sales, use and excise taxes, franchise taxes, real and personal property taxes, income taxes, and certain other taxes due in the normal course of business through certain First Day Motions. As such, applicable taxes had been paid when due except for amounts which are in dispute, if any.

Due to the level of detailed records, (i) copies of IRS form 6123 or payment receipts; (ii) copies of tax returns filed during the reporting period; and (iii) a taxes aging schedule will be made available upon reasonable request in writing to counsel for the Debtors.

The Debtors maintain a detailed aging of post-petition Trade Accounts Payable. The post-petition Trade Payable aging is from April 1, 2019 through June 30, 2019. The Debtors believe that the information as disclosed in MOR-4 appropriately summarizes the ending accounts payable balances of the Debtors. Due to the volume of transactions related to vendor payments, the accounts payable aging is not presented by vendor. Information by vendor will be provided upon reasonable request in writing to counsel for the Debtors.

The Debtors believe they are current on all post-petition payments other than disputes that arise in the ordinary course of business.



5



MOR NOTES
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


Notes to MOR-5:

The Debtors maintain an aging of Trade Accounts Receivable. The total per the aging on MOR-5 is adjusted for an Allowance for Doubtful Accounts to determine the Net Trade Receivables balance.

The Debtors believe that the information as disclosed in MOR-5 appropriately summarizes the ending accounts receivable of the Debtors. Detail of customer activity is not being provided due to confidentiality.

6



MOR-1
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


Schedule of Cash Receipts and Disbursements

TIME PERIOD: 6/1/2019 through 6/30/2019
Legal Entity*
Hexion Holdings LLC
Hexion LLC
Hexion 2 U.S. Finance Corp.
Hexion Inc.
Hexion HSM Holdings LLC
Lawter International Inc.
Hexion CI Holdings Company (China) LLC
Hexion Investments Inc.
Hexion Nimbus Inc.
Case Number
19-10684
19-10685
19-10686
19-10687
19-10688
19-10689
19-10690
19-106891
19-10692
Total Operating Receipts
$

$

$

$
157,299,432

$

$

$

$

$

 









Vendor payments
(57,716
)


(123,964,415
)





Payroll & benefits



(12,467,712
)





Other disbursements



(796,177
)





Total Operating Disbursements
(57,716
)


(137,228,304
)





 









Operating Cash Flow
(57,716
)


20,071,128






 









ABL Facility payoff









Interest/fees



(1,137,501
)





DIP ABL borrowings



5,000,000






DIP ABL repayments



(5,000,000
)





Other
406



(21,528
)





Total Investing & Financing
406



(1,159,029
)





 









Intercompany receipts



8,794,009






Intercompany disbursements



(24,060,942
)





Intra-debtor transfers, net*
23,222

(8,989
)

(1,181,026
)





 









US Net Cash Flow before Restructuring Disbursements
(34,088
)
(8,989
)

2,464,140






 









Professional fees



(3,648,968
)





Total Restructuring Disbursements



(3,648,968
)





 









US Net Cash Flow
$
(34,088
)
$
(8,989
)
$

$
(1,184,828
)
$

$

$

$

$

 









Proceeds from DIP Term Loan









Net Cash Flow
$
(34,088
)
$
(8,989
)
$

$
(1,184,828
)
$

$

$

$

$


*Funds transferred between US debtors have been deducted from the Summary of Cash Receipts and Disbursements amounts.

7



MOR-1
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


Schedule of Cash Receipts and Disbursements

TIME PERIOD: 6/1/2019 through 6/30/2019
Legal Entity*
Hexion International Inc.
Hexion Nimbus Asset Holdings LLC
North American Sugar Industries Incorporated
Hexion Deer Park LLC
Cuban-American Mercantile Corporation
Hexion VAD LLC
The West India Company
NL Coop Holdings LLC
Hexion Nova Scotia Finance, ULC
Case Number
19-10693
19-10694
19-10695
19-10696
19-10697
19-10698
19-10699
19-10700
19-10701
Total Operating Receipts
$

$

$

$

$

$

$

$

$

 









Vendor payments
(23,137
)


(1,166,794
)





Payroll & benefits
(23,848
)








Other disbursements









Total Operating Disbursements
(46,985
)


(1,166,794
)





 









Operating Cash Flow
(46,985
)


(1,166,794
)





 









ABL Facility payoff









Interest/fees
(554
)








DIP ABL borrowings









DIP ABL repayments









Other



(149
)





Total Investing & Financing
(554
)


(149
)





 









Intercompany receipts
23,875









Intercompany disbursements









Intra-debtor transfers, net*



1,166,794






 









US Net Cash Flow before Restructuring Disbursements
(23,664
)


(149
)





 









Professional fees









Total Restructuring Disbursements









 









US Net Cash Flow
$
(23,664
)
$

$

$
(149
)
$

$

$

$

$

 









Proceeds from DIP Term Loan









Net Cash Flow
$
(23,664
)
$

$

$
(149
)
$

$

$

$

$


*Funds transferred between US debtors have been deducted from the Summary of Cash Receipts and Disbursements amounts.

8


MOR-1
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


Summary of Cash Receipts and Disbursements

TIME PERIOD: 6/1/2019 through 6/30/2019

Debtor Name
Case No.
Receipts*
Disbursements*
Surplus / Deficit
Hexion Holdings LLC
19-10684
406

(57,716
)
(57,310
)
Hexion LLC
19-10685



Hexion 2 U.S. Finance Corp.
19-10686



Hexion Inc.
19-10687
171,093,441

(171,097,243
)
(3,802
)
Hexion HSM Holdings LLC
19-10688



Lawter International Inc.
19-10689



Hexion CI Holdings Company (China) LLC
19-10690



Hexion Investments Inc.
19-10691



Hexion Nimbus Inc.
19-10692



Hexion International Inc.
19-10693
23,874

(47,538
)
(23,664
)
Hexion Nimbus Asset Holdings LLC
19-10694



North American Sugar Industries Incorporated
19-10695



Hexion Deer Park LLC
19-10696

(1,166,942
)
(1,166,942
)
Cuban-American Mercantile Corporation
19-10697



Hexion VAD LLC
19-10698



The West India Company
19-10699



NL Coop Holdings LLC
19-10700



Hexion Nova Scotia Finance, ULC
19-10701



 
Total
$
171,117,721

$
(172,369,439
)
$
(1,251,718
)

*Funds transferred between US debtors have been deducted from receipt and disbursement amounts.



9


MOR-1
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


Schedule of Cash Receipts and Disbursements

TIME PERIOD: 4/1/2019 through 6/30/2019
Legal Entity*
Hexion Holdings LLC
Hexion LLC
Hexion 2 U.S. Finance Corp.
Hexion Inc.
Hexion HSM Holdings LLC
Lawter International Inc.
Hexion CI Holdings Company (China) LLC
Hexion Investments Inc.
Hexion Nimbus Inc.
Case Number
19-10684
19-10685
19-10686
19-10687
19-10688
19-10689
19-10690
19-106891
19-10692
Total Operating Receipts
$

$

$

$
431,438,755

$

$

$

$

$

 









Vendor payments
(97,310
)


(303,839,389
)





Payroll & benefits



(44,449,603
)





Other disbursements



(2,516,460
)





Total Operating Disbursements
(97,310
)


(350,805,452
)





 









Operating Cash Flow
(97,310
)


80,633,303






 









ABL Facility payoff



(203,712,987
)





Interest/fees



(84,065,348
)





DIP ABL borrowings



40,000,000






DIP ABL repayments



(40,000,000
)





Other
1,001



(660,512
)





Total Investing & Financing
1,001



(288,438,847
)





 









Intercompany receipts



10,500,632




202,849


Intercompany disbursements



(54,261,855
)





Intra-debtor transfers, net*
1,257,222

(8,989
)

(3,541,489
)





 









US Net Cash Flow before Restructuring Disbursements
1,160,913

(8,989
)

(255,108,256
)



202,849


 









Professional fees



(3,648,968
)





Total Restructuring Disbursements



(3,648,968
)





 









US Net Cash Flow
$
1,160,913

$
(8,989
)
$

$
(258,757,224
)
$

$

$

$
202,849

$

 









Proceeds from DIP Term Loan



257,000,000






Net Cash Flow
$
1,160,913

$
(8,989
)
$

$
(1,757,224
)
$

$

$

$
202,849

$


*Funds transferred between US debtors have been deducted from the Summary of Cash Receipts and Disbursements amounts.

10


MOR-1
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


Schedule of Cash Receipts and Disbursements

TIME PERIOD: 4/1/2019 through 6/30/2019
Legal Entity*
Hexion International Inc.
Hexion Nimbus Asset Holdings LLC
North American Sugar Industries Incorporated
Hexion Deer Park LLC
Cuban-American Mercantile Corporation
Hexion VAD LLC
The West India Company
NL Coop Holdings LLC
Hexion Nova Scotia Finance, ULC
Case Number
19-10693
19-10694
19-10695
19-10696
19-10697
19-10698
19-10699
19-10700
19-10701
Total Operating Receipts
$

$

$

$

$

$

$

$

$

 









Vendor payments
(45,726
)


(2,293,257
)





Payroll & benefits
(80,727
)








Other disbursements



(162
)





Total Operating Disbursements
(126,453
)


(2,293,419
)





 









Operating Cash Flow
(126,453
)


(2,293,419
)





 









ABL Facility payoff









Interest/fees
(1,614
)








DIP ABL borrowings









DIP ABL repayments









Other
(99
)


(286
)





Total Investing & Financing
(1,713
)


(286
)





 









Intercompany receipts
123,299









Intercompany disbursements









Intra-debtor transfers, net*



2,293,257






 









US Net Cash Flow before Restructuring Disbursements
(4,867
)


(448
)





 









Professional fees









Total Restructuring Disbursements









 









US Net Cash Flow
$
(4,867
)
$

$

$
(448
)
$

$

$

$

$

 









Proceeds from DIP Term Loan









Net Cash Flow
$
(4,867
)
$

$

$
(448
)
$

$

$

$

$


*Funds transferred between US debtors have been deducted from the Summary of Cash Receipts and Disbursements amounts.

11


MOR-1
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


Summary of Cash Receipts and Disbursements

TIME PERIOD: 4/1/2019 through 6/30/2019

Debtor Name
Case No.
Receipts*
Disbursements*
Surplus / Deficit
Hexion Holdings LLC
19-10684
1,001

(97,310
)
(96,309
)
Hexion LLC
19-10685



Hexion 2 U.S. Finance Corp.
19-10686



Hexion Inc.
19-10687
738,939,387

(737,155,122
)
1,784,265

Hexion HSM Holdings LLC
19-10688



Lawter International Inc.
19-10689



Hexion CI Holdings Company (China) LLC
19-10690



Hexion Investments Inc.
19-10691
202,849


202,849

Hexion Nimbus Inc.
19-10692



Hexion International Inc.
19-10693
123,299

(128,166
)
(4,867
)
Hexion Nimbus Asset Holdings LLC
19-10694



North American Sugar Industries Incorporated
19-10695



Hexion Deer Park LLC
19-10696

(2,293,705
)
(2,293,705
)
Cuban-American Mercantile Corporation
19-10697



Hexion VAD LLC
19-10698



The West India Company
19-10699



NL Coop Holdings LLC
19-10700



Hexion Nova Scotia Finance, ULC
19-10701



 
Total
$
739,266,536

$
(739,674,303
)
$
(407,767
)

*Funds transferred between US debtors have been deducted from receipt and disbursement amounts.


12



MOR-1a
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


Bank Account Information

Legal Entity
Bank Account
Bank Account #
Book Balance at 4/30/2019*
Book Balance at 5/31/2019*
Book Balance at 6/30/2019*
Hexion Inc
BAML - Receipts Account
XXXXXX-0265
$
1,122,977

$
636,925

$
719,919

Hexion LLC
BAML - Receipts/Disbursement Account
XXXXXX-6538
8,989

8,989


Hexion Inc
BAML - Concentration Account
XXXXXX-6659
9,238,706

4,352,252

12,158,683

Hexion Inc
BAML - Payroll Account
XXXXXX-8518
19,999

20,406

26,631

Hexion Holdings LLC
BAML - Receipts/Disbursement Account
XXXXXX-8904
37,088

34,494


Hexion Inc
PNC Bank - Funding Account
XXXXXX-4395
100,000

100,000

102,278

Hexion Inc
PNC Bank - AP Disbursement Account
XXXXXX-4408
(400,953
)
(1,433,185
)
(606,163
)
Hexion Inc
PNC Bank - Disbursement Account
XXXXXX-8578



Hexion International Inc
Moscow Citibank - Disbursement Account
XXXXXX-9001
5,886

33,084

3,270

Hexion International Inc
Moscow Citibank - Disbursement Account
XXXXXX-9002
4,612

1,871

8,021

Hexion Inc
Citibank - Medical Insurance Disbursement Account
XXXXXX-3255


 
Hexion Investments Inc
BAML - Receipts/Disbursement Account
XXXXXX-5368

202,849

202,849

Hexion Deer Park LLC
BAML - Receipts/Disbursement Account
XXXXXX-2760
2,821

2,684

2,535

Hexion Nova Scotia Finance, ULC
East West Bank - Escrow Account
XXXXXX-8709
49,943

49,956

49,968

Hexion Holdings LLC
BAML - Utility Deposit Account
XXXXXX-3849
1,234,176

1,234,595

1,235,001

Total Cash
 
 
$
11,424,244

$
5,244,920

$
13,902,992


*Book Balance may differ from Bank Balance due to items in-transit and other timing items.

13



MOR-1a
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


Status of Bank Account Reconciliations, Bank Statements and Cash Disbursement Journal

July 19, 2019

Office of the United States Trustee

Subject: June Monthly Operating Report Attestation Regarding Bank Account Reconciliations, Bank Statements and Cash Disbursement Journal

Bank Account Reconciliations & Cash Disbursement Journals

The Debtor, Hexion Holdings LLC, and its affiliated Debtors, hereby affirm that bank reconciliations are prepared for all open and active bank accounts on a monthly basis. The Debtors affirm that within their financial accounting systems, check registers and/or disbursement journals are maintained for each disbursement account.

Bank Statements

The Debtors affirm that bank statements for all open and active bank accounts are retained by the Debtors.

Opened/Closed Bank Accounts

The Debtors affirm that no bank accounts were opened or closed during the current reporting period.



/s/ George F. Knight
George F. Knight
Director, Executive Vice President and Chief Financial Officer and Manager, Hexion Holdings LLC


14



MOR-1b
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


Retained Professional Fees Paid

Advisors
Month Ended 6/30/2019
Cumulative
AlixPartners LLP
$
1,407,632

$
1,407,632

Latham & Watkins LLP
1,814,926

1,814,926

Moelis & Company


PricewaterhouseCoopers LLP


Ernst & Young LLP


Richards, Layton, & Finger, P.A.
235,763

235,763

Omni Management Group
156,001

156,001

Paul, Weiss, Rifkind, Wharton & Garrison LLP


Prime Clerk LLC
34,646

34,646

Squire Patton Boggs LLP


Total
$
3,648,968

$
3,648,968


Professional fees disclosed in this Report do not include payments to professionals or consultants in the ordinary course of business.

15



MOR-2
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


Statement of Operations (in 000's)

TIME PERIOD: 6/1/2019 through 6/30/2019

Legal Entity
Hexion Holdings LLC
Hexion LLC
Hexion 2 U.S. Finance Corp.
Hexion Inc.
Hexion HSM Holdings LLC
Lawter International Inc.
Hexion CI Holdings Company (China) LLC
Hexion Investments Inc.
Hexion Nimbus Inc.
Case Number
19-10684
19-10685
19-10686
19-10687
19-10688
19-10689
19-10690
19-106891
19-10692
Net sales
$

$

$

$
126,684

$

$

$

$

$

Cost of goods sold



102,522






Gross profit



24,162






Selling, general and administrative expense1
41

1,727


(1,635
)



105


Business realignment costs



3,921






Other operating expense (income), net
45



1,635




(50
)

Operating income
(86
)
(1,727
)

20,241




(55
)

Interest expense, net



554






Affiliated and intercompany interest income



(6,216
)



(35
)

Reorganization items, net



12,771






Other non-operating (income) expense



(12,568
)





Income before income tax
(86
)
(1,727
)

25,700




(20
)

Income tax expense



708






Net income
$
(86
)
$
(1,727
)
$

$
24,992

$

$

$

$
(20
)
$


(1) Net of intercompany charges to non-debtor entities.

The accompanying notes are an integral part of the financial statements.

16



MOR-2
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


Statement of Operations (in 000's)

TIME PERIOD: 6/1/2019 through 6/30/2019

Legal Entity
Hexion International Inc.
Hexion Nimbus Asset Holdings LLC
North American Sugar Industries Incorporated
Hexion Deer Park LLC
Cuban-American Mercantile Corporation
Hexion VAD LLC
The West India Company
NL Coop Holdings LLC
Hexion Nova Scotia Finance, ULC
Case Number
19-10693
19-10694
19-10695
19-10696
19-10697
19-10698
19-10699
19-10700
19-10701
Net sales
$

$

$

$

$

$

$

$

$

Cost of goods sold









Gross profit









Selling, general and administrative expense1
5









Business realignment costs









Other operating expense (income), net









Operating income
(5
)








Interest expense, net









Affiliated and intercompany interest income









Reorganization items, net









Other non-operating (income) expense
1









Income before income tax
(6
)








Income tax expense









Net income
$
(6
)
$

$

$

$

$

$

$

$


(1) Net of intercompany charges to non-debtor entities.

The accompanying notes are an integral part of the financial statements.


17



MOR-2
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


Statement of Operations (in 000's)

TIME PERIOD: 4/1/2019 through 6/30/2019

Legal Entity
Hexion Holdings LLC
Hexion LLC
Hexion 2 U.S. Finance Corp.
Hexion Inc.
Hexion HSM Holdings LLC
Lawter International Inc.
Hexion CI Holdings Company (China) LLC
Hexion Investments Inc.
Hexion Nimbus Inc.
Case Number
19-10684
19-10685
19-10686
19-10687
19-10688
19-10689
19-10690
19-106891
19-10692
Net sales
$

$

$

$
398,839

$

$

$

$

$

Cost of goods sold



328,276






Gross profit



70,563






Selling, general and administrative expense1
82

1,727


18,463




105


Business realignment costs



5,867






Other operating expense (income), net
(7
)


5,106




(153
)

Operating income
(75
)
(1,727
)

41,127




48


Interest (income) expense, net
(1
)


1,693






Affiliated and intercompany interest income



(19,005
)



(105
)

Reorganization items, net



52,111






Other non-operating (income) expense



(9,350
)





(Loss) income before income tax
(74
)
(1,727
)

15,678




153


Income tax expense



858






Net (loss) income
$
(74
)
$
(1,727
)
$

$
14,820

$

$

$

$
153

$


(1) Net of intercompany charges to non-debtor entities.

The accompanying notes are an integral part of the financial statements.

18



MOR-2
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


Statement of Operations (in 000's)

TIME PERIOD: 4/1/2019 through 6/30/2019

Legal Entity
Hexion International Inc.
Hexion Nimbus Asset Holdings LLC
North American Sugar Industries Incorporated
Hexion Deer Park LLC
Cuban-American Mercantile Corporation
Hexion VAD LLC
The West India Company
NL Coop Holdings LLC
Hexion Nova Scotia Finance, ULC
Case Number
19-10693
19-10694
19-10695
19-10696
19-10697
19-10698
19-10699
19-10700
19-10701
Net sales
$

$

$

$

$

$

$

$

$

Cost of goods sold









Gross profit









Selling, general and administrative expense1
2









Business realignment costs









Other operating expense (income), net
1









Operating income
(3
)








Interest (income) expense, net









Affiliated and intercompany interest income









Reorganization items, net









Other non-operating (income) expense
2









(Loss) income before income tax
(5
)








Income tax expense









Net (loss) income
$
(5
)
$

$

$

$

$

$

$

$


(1) Net of intercompany charges to non-debtor entities.

The accompanying notes are an integral part of the financial statements.



19



MOR-3
In re: HEXION HOLDINGS LLC, et al.
Case No. (Jointly Administered) 19-10684(KG)
Reporting Period: 6/1/19-6/30/19


Balance Sheet (in 000's)

TIME PERIOD: 6/30/19
Legal Entity
Hexion Holdings LLC
Hexion LLC
Hexion 2 U.S. Finance Corp.
Hexion Inc.
Hexion HSM Holdings LLC
Lawter International Inc.
Hexion CI Holdings Company (China) LLC
Hexion Investments Inc.
Hexion Nimbus Inc.
Case Number
19-10684
19-10685
19-10686
19-10687
19-10688
19-10689
19-10690
19-106891
19-10692
ASSETS
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
1,235

$

$

$
13,421

$

$

$

$
203

$

Accounts receivable (net of allowance)



140,977




50


Receivables from intercompany and affiliates

12,721


304,953




165


Inventories



143,181