Project Description

Hexion Spin-off Notes

September 30, 2021 Update

On September 29, 2021 Hexion (HXOH) announced its plan to separate into two independent companies. The first being “Hexion Holdings,” comprised of their Adhesive, Versatic Acids™, and Derivatives products. The second company, “HHC,” which will be renamed, will include their epoxy-based Coatings and Composites product lines. As is Hexion Holdings Corporation is a global leader in thermoset resins, the spin-off will try to provide each company with the financial flexibility to reshape their strategic visions, and innovate with their product lines. Hexion Holdings anticipates that the transaction will be a 100% stock distribution of HCC, a new and independent company to current holders.  The HCC spin-off is currently set to be completed in the fourth quarter 2021, upon its completion Hexion will file to IPO on the NYSE. 

I’m digging into this one, but it’s an interesting set up. If you look up HXOH on Yahoo Finance or Ycharts, there is no market cap or enterprise value. By going through the 10-K, I was able to determine its market cap and enterprise value. By my math, it’s trading at 4.5x annualized EBITDA. Competitor, Huntsman (HUN), trades at 6.2x EBITDA so presumably there is upside to the equity. 

Liquidity is very low given it’s a post reorg equity and most of shares are owned by distressed investors. It looks interesting, and I’m going to dig deeper into it.