Albany, N.Y.-based Momentive Performance Materials Inc. has extremely high leverage. As of March 29, 2009, total adjusted debt was close to $4 billion, and total adjusted debt to EBITDA was well into the double digits. We adjust debt to include about $500 million of pay-in-kind seller notes at the parent holding company, about $125 million in underfunded, tax-effected postretirement obligations, and $40 million of capitalized operating leases. Since then, the company reduced debt slightly by issuing $200 million in second-lien notes in exchange for a total of approximately $350 million of various senior unsecured and subordinated notes. We considered this transaction a distressed exchange offer. Operating performance deteriorated sharply in tandem with recessionary conditions and a big drop-off in customer
