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Related Party Transactions
12 Months Ended
Dec. 31, 2016
Related Party Transactions [Abstract]  
Related Party Transactions Disclosure [Text Block]
Related Party Transactions
Administrative Service, Management and Consulting Arrangement
The Company is subject to a Management Consulting Agreement with Apollo (the “Management Consulting Agreement”) that renews on an annual basis, unless notice to the contrary is given by either party. Under the Management Consulting Agreement, the Company receives certain structuring and advisory services from Apollo and its affiliates. The Management Consulting Agreement provides indemnification to Apollo, its affiliates and their directors, officers and representatives for potential losses arising from these services. Apollo is entitled to an annual fee equal to the greater of $3 or 2% of the Company’s Adjusted EBITDA. Apollo elected to waive charges of any portion of the annual management fee due in excess of $3 for the years ended December 31, 2016, 2015 and 2014.
During each of the years ended December 31, 2016, 2015 and 2014, the Company recognized expense under the Management Consulting Agreement of $3. This amount is included in “Other operating expense (income), net” in the Company’s Consolidated Statements of Operations.
Transactions with MPM
Shared Services Agreement
On October 1, 2010, the Company entered into a shared services agreement with Momentive Performance Materials Inc. (‘MPM”) (which, from October 1, 2010 through October 24, 2014, was a subsidiary of Hexion Holdings), as amended in October 2014 (the “Shared Services Agreement”). Under this agreement, the Company provides to MPM, and MPM provides to the Company, certain services, including, but not limited to, executive and senior management, administrative support, human resources, information technology support, accounting, finance, technology development, legal and procurement services. The Shared Services Agreement establishes certain criteria upon which the costs of such services are allocated between the Company and MPM. The Shared Services Agreement was renewed for one year starting October 2016 and is subject to termination by either the Company or MPM, without cause, on not less than 30 days’ written notice, and expires in October 2017 (subject to one-year renewals every year thereafter; absent contrary notice from either party).
Pursuant to the Shared Services Agreement, during the years ended December 31, 2016, 2015 and 2014, the Company incurred approximately $63, $70 and $131, respectively, of net costs for shared services and MPM incurred approximately $50, $60 and $99, respectively, of net costs for shared services. Included in the net costs incurred during the years ended December 31, 2016, 2015 and 2014, were net billings from the Company to MPM of $30, $35 and $49, respectively, to bring the percentage of total net incurred costs for shared services under the Shared Services Agreement to the applicable allocation percentage. The allocation percentage for 2016 changed from 2015 from 54% to 56% for the Company and 46% to 44% for MPM. The scope of services and allocation percentages are reviewed by the Steering Committee pursuant to the terms of the Shared Services Agreement. The Company had accounts receivable from MPM of $5 and $7 as of December 31, 2016 and 2015, respectively, and no accounts payable to MPM.
Sales and Purchases of Products and Services with MPM
The Company also sells products to, and purchases products from, MPM. During the years ended December 31, 2016, 2015 and 2014, the Company sold less than $1, $1 and $1, respectively, of products to MPM and purchased $1, $3 and $8, respectively. As both of December 31, 2016 and 2015, the Company had less than $1 of accounts receivable from MPM and less than $1 of accounts payable to MPM related to these agreements.

Other Transactions with MPM

In April 2014, the Company purchased 100% of the interests in MPM’s Canadian subsidiary for a purchase price of approximately $12. As a part of the transaction the Company also entered into a non-exclusive distribution agreement with a subsidiary of MPM, whereby the Company acts as a distributor of certain MPM products in Canada. The agreement has a term of 10 years, and is cancelable by either party with 180 days’ notice. The Company is compensated for acting as distributor at a rate of 2% of the net selling price of the related products sold. During the years ended December 31, 2016 and 2015, the Company purchased approximately $26 and $28, respectively, of products from MPM under this distribution agreement, and earned $1 from MPM as compensation for acting as distributor of the products. As of both December 31, 2016 and 2015, the Company had $2 of accounts payable to MPM related to the distribution agreement.

As both the Company and MPM shared a common ultimate parent at the time of the transaction, this purchase was accounted for as a transaction under common control as defined in the accounting guidance for business combinations, resulting in the Company recording the net assets of the acquired entity at carrying value. Additionally, the gain on the purchase of $3 was accounted for as a capital contribution, and is reflected as an addition to “Paid-in-Capital” in the Consolidated Balance Sheets.
Purchases and Sales of Products and Services with Affiliates Other than MPM
The Company sells products to various Apollo affiliates other than MPM. These sales were $6, $59 and $114 for the years ended December 31, 2016, 2015 and 2014, respectively. Accounts receivable from these affiliates were less than $1 at both December 31, 2016 and 2015. The Company also purchases raw materials and services from various Apollo affiliates other than MPM. These purchases were less than $1, $3 and $5 for the years ended December 31, 2016, 2015 and 2014, respectively. The Company had accounts payable to these affiliates of less than $1 at both December 31, 2016 and 2015.
Participation of Apollo Global Securities in Refinancing Transactions
In April 2015, Apollo Global Securities, LLC (“AGS”), an affiliate of Apollo, acted as one of the initial purchasers and received less than $1 in connection with the sale of the $315 aggregate principal amount of the Company’s 10.00% First-Priority Senior Secured Notes due 2020.
Other Transactions and Arrangements
The Company sells finished goods to, and purchases raw materials from, HA-International, LLC (“HAI”), a former foundry joint venture between the Company and HA-USA Inc. (“HA-USA”). The Company also provides toll-manufacturing and other services to HAI. On May 31, 2016, the Company sold its 50% investment in HAI to HA-USA (see Note 12), and as of June 1, 2016, HAI is no longer a related party. Previous to this sale, the Company’s investment in HAI was recorded under the equity method of accounting, and the related sales and purchases were not eliminated from the Consolidated Financial Statements. However, any profit on these transactions was eliminated in the Consolidated Financial Statements to the extent of the Company’s 50% interest in HAI.
Through the date of the sale of the Company’s investment in HAI to HA-USA, sales and services provided to HAI were $26, $72 and $107 for the years ended December 31, 2016, 2015 and 2014, respectively. Accounts receivable from HAI were $1 at December 31, 2015. Purchases from HAI were $4, $16 and $36 for the years ended December 31, 2016, 2015 and 2014, respectively. The Company had accounts payable to HAI of $1 at December 31, 2015. Additionally, HAI declared dividends to the Company of $4 and $19 during the years ended December 31, 2016 and 2015, respectively. No amounts remain outstanding related to these previously declared dividends as of December 31, 2016.
The Company’s purchase contracts with HAI represented a significant portion of HAI’s total revenue, and this factor resulted in the Company absorbing the majority of the risk from potential losses or the majority of the gains from potential returns. However, the Company did not have the power to direct the activities that most significantly impact HAI, and therefore, did not consolidate HAI. The carrying value of HAI’s assets and liabilities were $44 and $14, respectively, at December 31, 2015.
In 2013, the Company and HAI resolved a dispute regarding raw material pricing. As part of the resolution, the Company provided discounts to HAI on future purchases of dry and liquid resins totaling $16 over a period of three years. During the year ended December 31, 2016, the Company issued $1 of discounts to HAI under this agreement. As of December 31, 2016, no amounts remained outstanding under this agreement. As of December 31, 2015, $1 remained outstanding under this agreement, all of which is classified in “Other current liabilities” in the Consolidated Balance Sheets.
The Company sells products and provides services to, and purchases products from, its other joint ventures which are recorded under the equity method of accounting. These sales were $17, $33, and $27 for the years ended December 31, 2016, 2015 and 2014, respectively. Accounts receivable from these joint ventures were $7 and $10 at December 31, 2016 and 2015, respectively. These purchases were $13, $33, and $26 for the years ended December 31, 2016, 2015 and 2014, respectively. The Company had accounts payable to these joint ventures of $1 and $2 at December 31, 2016 and 2015, respectively.
The Company had a loan receivable of $6 and royalties receivable of $2 as of both December 31, 2016 and 2015 from its unconsolidated forest products joint venture in Russia.

In February 2014, the Company made a restricted purpose loan of $50 to Superholdco Finance Corp (“Finco”), a newly formed subsidiary of Hexion Holdings, which was repaid in full during the year ended December 31, 2014. The loan had a maturity date in February 2015, and bore interest at LIBOR plus 3.75% per annum. The loan was fully collateralized by the assets of Finco. On April 7, 2014, Finco entered into an agreement with MPM under which it purchased approximately $51 of accounts receivable from MPM, paying 95% of the proceeds in cash, with the remaining 5% to be paid in cash when the sold receivables were fully collected. The agreement also appointed MPM to act as the servicer of the receivables on behalf of Finco. Interest incurred under the loan agreement was less than $1 for the year ended December 31, 2014.
As of December 31, 2014, Finco was deemed to be a VIE, and the Company’s loan to Finco represented a variable interest in Finco. The power to direct the activities that most significantly impact the VIE was shared between the Company and the other related party variable interest entity holder. In July 2015, Finco was dissolved.