Hexion Holdings to Launch IPO, Spinoff Epoxy Business

Hexion Holdings Corporation today announced its plan to separate into two independent companies through an IPO and spinoff of its epoxy business.

The two companies will be Hexion Holdings, composed of the Company’s Adhesives and Versatic Acids and Derivatives product lines, and Hexion Coatings and Composites (US) Inc. (HCC), composed of Hexion Holdings’ former epoxy-based Coatings and Composites products.

Hexion Holdings anticipates that the HCC separation transaction will be in the form of a distribution of 100% of the stock of HCC, a new and independent company to current holders of Hexion Holdings common stock and warrants.

Upon completion of the HCC spin, current Hexion Holdings shareholders will own shares of both Hexion Holdings and HCC. As previously disclosed, Hexion Holdings will file a registration statement on Form S-1 with the U.S. Securities and Exchange Commission for a proposed initial public offering on the New York Stock Exchange.

“Today marks the beginning of an exciting new chapter in Hexion’s 122-year history, and continues our strategy of narrowing our focus, improving the Company’s financial flexibility and driving long-term value creation for our shareholders,” said Craig Rogerson, Hexion Chairman, President and Chief Executive Officer.

The Company believes that this separation will result in material benefits to the standalone companies, including:

  • Distinct strategic and management focus on specific operational, R&D and growth priorities, including the analysis of macroeconomic trends and the implementation of financial targets that best fit each business;
  • A capital structure, dividend policy and capital deployment strategy tailored to specific business models and growth strategies. Both businesses are expected to have direct access to the debt and equity capital markets to fund their respective growth strategies; and
  • An investor base that is aligned with the streamlined value proposition for each company.

Following the separation, Hexion Holdings will consist of the Company’s existing Adhesives and Versatic Acids and Derivatives product lines.

As a standalone company, Hexion Holdings is expected to have favorable cash flow attributes and a stronger financial profile.

Hexion Holdings generated historical net sales of $2.5 billion and pro forma net sales of approximately $1.4 billion for the year-ended December 31, 2020.

Hexion is expected to maintain appropriate debt levels going forward.