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Momentive Specialty Chemicals Inc. Announces Tender Offer for Certain of its Outstanding Notes

Friday 22. October 2010 - Momentive Specialty Chemicals Inc. ("Momentive Specialty Chemicals" or the "Company"), formerly known as Hexion Specialty Chemicals, Inc., announced today that it will launch a cash tender offer with respect to any and all of its outstanding 9.75% Second-Priority Senior Secured Notes due 2014 (the "Notes").

The Notes and other information relative to the tender offers are set forth in the table below.
1 As of October 19, 2010. 2 For each $1,000 principal amount of Notes, excluding accrued but unpaid interest thereon, which will be paid in addition to
the tender offer consideration or the total consideration, as applicable. 3 For each $1,000 principal amount of Notes tendered prior to the Early Tender Date. 4 Includes the tender offer consideration and the early tender payment.
Each holder who validly tenders its Notes prior to 5:00 p.m., New York City time, on November 4, 2010, unless such time is extended by the Company (the “Early Tender Date”), will receive, if such Notes are accepted for purchase pursuant to the tender offer, the total consideration of $1053.75 per $1,000 principal amount of Notes tendered, which includes $1043.75 as the tender offer consideration and $10.00 as an early tender payment. In addition, accrued interest up to, but not including, the applicable payment date of the Notes will be paid in cash on all validly tendered and accepted Notes.
Each tender offer is scheduled to expire at 11:59 p.m., New York City time, on November 19, 2010, unless extended or earlier terminated (the “Expiration Date”). Tendered Notes may be withdrawn at any time prior to the Early Tender Date but not thereafter, except to the extent that the Company is required by law to provide additional withdrawal rights. Holders who validly tender their Notes after the Early Tender Date will receive only the tender offer consideration and will not be entitled to receive an early tender payment if such Notes are accepted for purchase pursuant to the tender offer. Subject to the terms and conditions described below, payment of the tender offer consideration or total consideration, as applicable, will occur promptly after the Expiration Date (such payment is currently expected to occur on or about November 22, 2010, unless the Expiration Date is extended or the tender offer is earlier terminated). In addition, at any time after the Early Tender Date but prior to the Expiration Date, and subject to the terms and conditions described below, the Company may accept for purchase Notes validly tendered on or prior to such time and purchase such notes for the tender offer consideration or total consideration, as applicable, promptly thereafter.
The consummation of the tender offer is conditioned upon, among other things, the issuance of new second- priority senior secured debt, with terms (including economic terms) acceptable to the Company in its sole discretion, to permit the closing of the tender offer and related transactions, and the availability of proceeds from the issuance of the new debt necessary to pay the applicable total consideration and interest to the applicable payment date, for validly tendered notes (including applicable premiums, fees and expenses).
If any of the conditions are not satisfied, the Company may terminate the tender offer and return tendered Notes. The Company has the right to waive any of the foregoing conditions with respect to the Notes. In addition, the Company has the right, in its sole discretion, to terminate the tender offer at any time, subject to applicable law.
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Subject to the occurrence of the closing of the new debt offering, the Company thereafter will, pursuant to the provisions of the Notes and the indenture under which the Notes were issued, including applicable notice provisions, redeem any Notes not tendered and accepted for payment in the tender offer, or if the tender offer is not consummated, any and all outstanding Notes.
This announcement shall not constitute an offer to purchase or a solicitation of an offer to sell any securities. The complete terms and conditions of the tender offer are set forth in an Offer to Purchase dated October 22, 2010 and the related Letter of Transmittal (the “Tender Offer Documents”) that are being sent to holders of the Notes. The tender offer is being made only through, and subject to the terms and conditions set forth in, the Tender Offer Documents and related materials.
Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC will act as Dealer Managers for the tender offer. Questions regarding the tender offer may be directed to Citigroup Global Markets Inc. at (800) 558-3745 (toll-free) or at (212) 723-6106 (collect); to Credit Suisse Securities (USA) LLC at (800) 820-1653 (toll-free) or at (212) 325-5912 (collect); and to J.P. Morgan Securities LLC at (800) 245-8812 (toll- free) or at (212) 270-1200 (collect).
Global Bondholder Services Corporation will act as the Information Agent for the tender offer. Requests for the Tender Offer Documents may be directed to Global Bondholder Services Corporation at (212) 430-3774 (for brokers and banks) or (866) 470-4500 (for all others).
Neither the Company’s board of directors nor any other person makes any recommendation as to whether holders of Notes should tender their Notes, and no one has been authorized to make such a recommendation. Holders of Notes must make their own decisions as to whether to tender their Notes, and if they decide to do so, the principal amount of the Notes to tender. Holders of the Notes should read carefully the Tender Offer Documents and related materials before any decision is made with respect to the tender offer.
Apollo Management L.P. (“Apollo”) owns approximately $127 million principal amount of the Notes, which collectively represents approximately 24% of the total outstanding Notes and 21% of the total outstanding Notes together with the Second-Priority Senior Secured Floating Rate Notes due 2014 that were issued under the Indenture. Apollo will enter into an agreement to exchange the entire amount of its current holdings of Notes for new debt of the Company at an exchange ratio determined based on the tender consideration offered to holders of the Notes, which is intended to give Apollo an aggregate value equivalent to that which it would receive if it had received the total consideration in the tender offer and used the proceeds thereof to invest in the new debt. The new debt will have the same terms as the new notes issued by the Company to finance the tender offer.