Related Party Transactions

Transactions with Apollo

As of the Company’s emergence from bankruptcy on July 1, 2019, Apollo is no longer a related party to the Company.

Management Consulting Agreement

The Company was party to a Management Consulting Agreement with Apollo (the “Management Consulting Agreement”) pursuant to which the Company received certain structuring and advisory services from Apollo and its affiliates. Apollo was 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 calendar year 2019.

During the Predecessor three months ended March 31, 2019, the Company recognized expense under the Management Consulting Agreement of $1. This amount is included in “Other operating expense, net” in the unaudited Condensed Consolidated Statements of Operations. In conjunction with the Company’s Chapter 11 proceedings and the Support Agreement filed on April 1, 2019, Apollo agreed to waive its annual management fee for 2019. In connection with the Company’s emergence from Chapter 11, the Management Consulting Agreement was terminated pursuant to the Confirmation Order, as of the Effective Date.

Purchases and Sales of Products and Services with Apollo Affiliates

The Company sells products to various Apollo affiliates. These sales were $1 for the Predecessor three months ended March 31, 2019. There were no purchases during the Predecessor three months ended March 31, 2019.

Transactions with MPM

As of May 15, 2019, Momentive Performance Materials (“MPM”) is no longer under the common control of Apollo and no longer a related party to the Company.

Shared Services Agreement

The Company previously held a shared services agreement with MPM (the “Shared Services Agreement”). Under this agreement, the Company provided to MPM, and MPM provided 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 established certain criteria upon which the costs of such services are allocated between the Company and MPM. On March 14, 2019, MPM terminated the Shared Services Agreement, which triggered a transition period for the parties to work together to facilitate an orderly transition of services. In the first quarter of 2020, the transition of services was completed.

Pursuant to the Shared Services Agreement, during the Predecessor three months ended March 31, 2019 the Company incurred approximately $6 of net costs for shared services and MPM incurred approximately $5 of net costs for shared services. Included in the net costs incurred during the Predecessor three months ended March 31, 2019 were net billings from Hexion to MPM of $3 to bring the percentage of total net incurred costs for shared services under the Shared Services Agreement to the applicable agreed upon allocation percentage.

Sales and Purchases of Products with MPM

The Company also sells products to, and purchases products from, MPM. There were no products sold during the Predecessor three months ended March 31, 2019. During the Predecessor three months ended March 31, 2019, the Company earned less than $1 from MPM as compensation for acting as distributor of products and had purchases from MPM of $7.

Other Transactions and Arrangements

In March 2020, the Company entered into a $10 short term affiliate loan with its Parent at a 0% interest rate to fund Parent share repurchases, which is recorded in “Loan Receivable from Parent” in the Condensed Consolidated Balance Sheets at March 31, 2020.

The Company sells products and provides services to, and purchases products from, its joint ventures which are recorded under the equity method of accounting. Refer to the below table for a summary of the sales and purchases with the Company and its joint ventures which are recorded under the equity method of accounting:



	Successor		Predecessor
	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Sales to joint ventures	$	1	$	1
Purchases from joint ventures	<1		1



	March 31, 2020		December 31, 2019
Accounts receivable from joint ventures	$	1	$	1
Accounts payable to joint ventures	<1		<1

In addition to the accounts receivable from joint ventures disclosed above, the Company had a loan receivable of $6 and $7 as of March 31, 2020 and December 31, 2019, respectively, from its unconsolidated forest products joint venture in Russia.