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Related Party Transactions
12 Months Ended
Dec. 31, 2017
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, 2017, 2016 and 2015.
During each of the years ended December 31, 2017, 2016 and 2015, the Company recognized expense under the Management Consulting Agreement of $3. This amount is included in “Other operating expense, 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, 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 2017 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 2018 (subject to one-year renewals every year thereafter; absent contrary notice from either party). The Company periodically reviews the scope of services provided under this agreement.
Pursuant to the Shared Services Agreement, during the years ended December 31, 2017, 2016 and 2015, the Company incurred approximately $48, $63 and $70, respectively, of net costs for shared services and MPM incurred approximately $38, $50 and $60, respectively, of net costs for shared services. Included in the net costs incurred during the years ended December 31, 2017, 2016 and 2015, were net billings from the Company to MPM of $26, $30 and $35, 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 2017 and 2016 was 56% for the Company and 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 $3 and $5 as of December 31, 2017 and 2016, 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, 2017, 2016 and 2015, the Company sold less than $1, less than $1 and $1, respectively, of products to MPM and purchased $24, $27 and $31, respectively. During the years ended December 31, 2017, 2016, and 2015, the Company earned $1 from MPM as compensation for acting as distributor of products. The Company had no accounts receivable from MPM as of December 31, 2017 and less than $1 as of December 31, 2016, and $2 of accounts payable to MPM as of both December 31, 2017 and 2016 related to these agreements.
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 $4, $6 and $59 for the years ended December 31, 2017, 2016 and 2015, respectively. Accounts receivable from these affiliates were less than $1 at both December 31, 2017 and 2016. The Company also purchases raw materials and services from various Apollo affiliates other than MPM. There were no purchases for the year ended December 31, 2017 and purchases of less than $1 and $3 for the years ended December 31, 2016 and 2015, respectively. The Company had no accounts payable to these affiliates at December 31, 2017 and accounts payable of less than $1 at December 31, 2016.
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 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, $43, and $105 for the years ended December 31, 2017, 2016 and 2015, respectively. Accounts receivable from these joint ventures were $6 and $7 at December 31, 2017 and 2016, respectively. These purchases were $14, $17, and $49 for the years ended December 31, 2017, 2016 and 2015, respectively. The Company had accounts payable to these joint ventures of $1 at both December 31, 2017 and 2016.
The Company had a loan receivable of $6 and royalties receivable of $1 and $2 as of December 31, 2017 and 2016, respectively, from its unconsolidated forest products joint venture in Russia. Note that these royalties receivable are also included in the accounts receivable from joint ventures disclosed above.