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Momentive Performance Materials Inc. recently announced preliminary results for the third quarter ended September 27, 2009. Momentive expects to post third quarter 2009 net sales of approximately $550 million to $570 million, GAAP operating income of approximately $35 to $45 million and adjusted EBITDA of approximately $84 to $94 million.
Last year in the third quarter, Momentive recorded net sales of approximately $699.9 million, GAAP operating income of approximately $17.6 million, and adjusted EBITDA of approximately $115.9 million (reflecting pro-forma effects of certain estimated cost savings as described in Momentive’s Form 10-K for the year ended December 31, 2008). Momentive also estimates that its total debt, net of cash and cash equivalents, will be between $2,830 million and $2,860 million at the end of the third quarter of 2009, essentially unchanged from $2,860 million as of June 28, 2009, reflecting stronger cash flows offset by the increase in its debt denominated in euro due to the effect of a weaker U.S. dollar.
“Demand has continued to steadily improve on a quarterly basis since the beginning of the year,” said Jonathan Rich, president and CEO. “The effects of the recession, however, have continued to impact year-over-year comparisons. While visibility to demand remains limited, we do expect to see continued benefits in the fourth quarter from the cost actions that we’ve taken to date.”
Momentive also announced that it has successfully concluded discussions with its revolving credit facility lenders and entered into an agreement to waive and amend certain terms of the credit agreement dated as of December 4, 2006, by and among Momentive; its parent, Momentive Performance Materials Holdings Inc.; certain of its subsidiaries; JPMorgan Chase Bank, N.A., as administrative agent; and the lenders thereto. Pursuant to the waiver and amendment, among other provisions, the requisite revolving credit facility lenders agreed to waive compliance by Momentive with the senior secured leverage ratio maintenance covenant set forth in the credit agreement for the fiscal quarters ending September 27, 2009, and December 31, 2009, subject to certain conditions, and the applicable margin on revolving credit facility borrowings under the credit agreement was increased by 125 basis points. In addition, Momentive agreed to pay a one-time fee in an amount equal to 0.25% of the revolving facility commitment of each revolving facility lender that was a party to the waiver and amendment and to reimburse certain fees and expenses incurred in connection with the waiver and amendment.
“Although business conditions have steadily improved since the first quarter of 2009, we entered into the waiver and amendment as a precautionary measure to remove any uncertainty regarding compliance with the financial maintenance covenant in the credit agreement,” said Rich. “As a result of the waiver and the actions we’ve taken to reduce our cost structure, the company is well-positioned to comply with the maintenance covenant as the economy recovers.”
For additional information, visit www.momentive.com.