Case Doc 14 Filed 10/31/17 Page 1 of 72

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1 Case Doc 14 Filed 10/31/17 Page 1 of 72 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE In re: Chapter 11 M & G USA CORPORATION, et al., 1 Debtors. Case No (BLS) (Joint Administration Requested) MOTION FOR ENTRY OF INTERIM AND FINAL ORDERS TO (1) AUTHORIZE CERTAIN DEBTORS IN POSSESSION TO OBTAIN POST-PETITION FINANCING PURSUANT TO 11 U.S.C. 105, 362, 363 AND 364; (2) GRANT LIENS AND SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIMS TO DIP LENDER PURSUANT TO 11 U.S.C. 364 AND 507; (3) PROVIDE ADEQUATE PROTECTION TO THE PRE-PETITION FIRST LIEN LENDER AND THE PRE-PETITION SECOND LIEN SECURED PARTY; (4) MODIFY AUTOMATIC STAY PURSUANT TO 11 U.S.C. 361,362,363,364 AND 507; (5) SCHEDULE FINAL HEARING PURSUANT TO BANKRUPTCY RULES 4001(b) AND (C) AND LOCAL RULE ; AND (6) GRANT RELATED RELIEF The Debtors are the following twelve entities (the last four digits of their respective taxpayer identification numbers follow in parentheses): M & G USA Corporation (3449), M & G Resins USA, LLC (3236), M & G Polymers USA, LLC (7593), M & G Finance Corporation (4230), M&G Waters USA, LLC (2195), Mossi & Ghisolfi International S.a r.l. (1270), M&G Chemicals S.A. (1022), M&G Capital S.a r.l. (7812), M & G USA Holding, LLC (3451), Chemtex International Inc. (7695), Chemtex Far East, Ltd. (2062) and Indo American Investments, Inc. (9208). The Debtors' noticing address in these chapter 11 cases is 450 Gears Road, Suite 240, Houston, Texas NAJ v22

2 Case Doc 14 Filed 10/31/17 Page 2 of 72 TABLE OF CONTENTS Page Preliminary Statement... 1 Jurisdiction and Venue... 4 Relief Requested... 4 Background... ~... 6 I. General Background... 6 II. Overview of the Debtors' Prepetition Capital Structure... 9 A. Pre-Petition First Lien Obligations... 9 B. Pre-Petition Second Lien Obligations C. Lux Inbursa Loan D. Macquarie Credit Facility E. Delta Loyd Facility F. M&G Polymers' Revolving Credit Facilities G. Sculptor Bonds H. Banco do Brasil Loan I. ICBC Loan J. Guarantee Obligations K. Additional Unsecured Debt L. Intercompany Obligations III. The Debtors' Immediate Need for Liquidity IV. The Terms of the DIP Facility Are Fair and Reasonable Summary of Principal Terms of DIP Facility Requirements Under Local Rule I. Cross Collateralization II. Stipulation and Challenge Provisions III. Section 506(c) Waiver IV. Liens on A voidance Actions V. Roll-up VI. Creditors' Committee Professionals VII. Priming Liens VII. "Equities of the Case" Exception... 44

3 Case Doc 14 Filed 10/31/17 Page 3 of 72 TABLE OF CONTENTS (continued) Page Basis for Relief I. Entry into the DIP Facility Is an Exercise of the Debtors' Sound Business Judgment II. III. IV. The Debtors Should Be Authorized to Obtain Postpetition Financing Under Section 364(c) of the Bankruptcy Code A. The Necessary Postpetition Financing Is Not Available on an Unsecured Basis B. The DIP Facility Is Necessary to Preserve and Protect the Assets of the Debtors' Estates C. The Terms of the DIP Credit Facility Are Fair, Reasonable and Adequate Under the Circumstances The Debtors Should Be Authorized to Obtain Priming Liens Under Section 3 64( d) of the Bankruptcy Code A. The Necessary Postpetition Financing Is Available Only on a Priming Basis B. The Interests of the Pre-Petition First Lien Lender and Pre-Petition Second Lien Secured Party Are Adequately Protected The Debtors Should Be Authorized to Pay the Fees Required by the DIP Secured Parties V. The Scope of the Carve Out Is Appropriate Request for Use of Cash Collateral Request for Modification of the Automatic Stay Request for a Finding of Good Faith Request for Interim Hearing and Authority to Make Interim Borrowings under the DIP Facility Request to Establish Notice Procedures and Schedule Final Hearing Notice No Prior Request NAI v22 11

4 Case Doc 14 Filed 10/31/17 Page 4 of 72 TABLE OF AUTHORITIES Page CASES Bray v. Shenandoah Fed Sav. & Loan Ass'n (In re Snowshoe Co.), 789 F.2d 1085 (4th Cir. 1986) Burtch v. Ganz (In re Mushroom Transp. Co.), 382 F.3d 325 (3d Cir. 2004) In re 495 Cent. Park Ave., Corp., 136 B.R. 626 (Bankr. S.D.N.Y. 1992)... 51, 53, 56 In re Aeropostale, Inc., No (SHL) (Bankr. S.D.N.Y. May 5, 2016) (Docket No. 113) In re American Apparel, Inc., No (Bankr. D. Del. Oct. 6, 2015) In re Ames Dep't Stores, 115 B.R. 34 (Bankr. S.D.N.Y. 1990)....47, 48, 58, 59,62 In re Aqua Assocs., 123 B.R. 192 (Bankr. E.D. Pa. 1991) In re A WI Delaware, No (Bankr. D. Del. Oct. 6, 2014) In re Cal Dive Inti, Inc., No (Bankr. D. Del. Apr. 20, 2015) In re Crouse Grp., Inc., 71 B.R. 544 (Bankr. E.D. Pa. 1987) In re Dunes Casino Hotel, 69 B.R. 784 (Bankr. D.N.J. 1986)...., In re Farmland Indus., Inc., 294 B.R. 855 (Bankr. W.D. Mo. 2003) In re Filene 's Basement, LLC, 2014 WL (Bankr. D. Del. Apr. 29, 2014) iii

5 Case Doc 14 Filed 10/31/17 Page 5 of 72 In re Horsehead Holding Corp., No (CSS) (Bankr. D. Del. March 1, 2016) In re Hubbard Power & Light, 202 B.R. 680 (Bankr. E.D.N.Y. 1996) In re Hudson, 2011 WL (Bankr. M.D. Tex. Mar. 16, 2011) In re Los Angeles Dodgers LLC, 457 B.R. 308 (Bankr. D. Del. 2011) In re NEC Holdings Corp., No (Bankr. D. Del. Jul. 16, 2010) In re The Original Soup man, Inc., No (Bankr. D. Del. July 18, 2017) In re Pacific Energy Res., Ltd., No (Bankr. D. Del. Jun. 4, 2009) In re Radio Shack Corp., No (Bankr. D. Del. Mar. 12, 2015) In re Real Mex Rests., Inc., No (Bankr. D. Del. Nov. 9, 2011) In re Simasko Prod. Co., 47 B.R. 444 (Bankr. D. Colo. 1985) In re Sky Valley, Inc., 100 B.R. 107 (Bankr. N.D. Ga. 1988), affd sub nom. Anchor Sav. Bank FSB v. Sky Valley, Inc., 99 B.R. 117 (N.D. Ga. 1989) In re Sun iva, Inc., No (KG) (Bankr. D. Del. May 19, 2017) In re Yellowstone Mountain Club, LLC, 2008 WL (Bankr. D. Mont. Dec. 17, 2008) In re YL West 87th Holdings I LLC, 423 B.R. 421 (Bankr. S.D.N.Y. 2010) NAI-! !3v22 DOCS_DE:2!59!2.!54032/00! IV

6 Case Doc 14 Filed 10/31/17 Page 6 of 72 Resolution Trust Corp. v. Swedeland Dev. Grp, Inc. (In re Swedeland Dev. Grp, Inc.), 16 F.3d 552 (3d Cir. 1994) Richmond Leasing Co. v. Capital Bank, NA., 762 F.2d 1303 (5th Cir. 1985) Shaw Indus., Inc. v. First Nat'[ Bank of PA (In re Shaw Indus., Inc.), 300 B.R. 861 (Bankr. W.D. Pa. 2003) Trans World Airlines, Inc. v. Travellers Int'l AG (In re Trans World Airlines, Inc.), 163 B.R. 964 (Bankr. D. Del. 1994) Unsecured Creditors' Comm. Mobil Oil Corp. v. First Nat'[ Bank & Trust Co. (In re Ellingsen MacLean Oil Co.), 65 B.R. 358 (W.D. Mich. 1986) STATUTES 11 u.s.c ,4 11 U.S.C u.s.c , 4 11 U.S.C , 4, 6, u.s.c , 4, 5, 59,60 11 U.S.C passim 11 U.S.C. 503(b)... 47, U.S.C. 506(c)... 6, 40, U.S.C , 4, u.s.c , u.s.c u.s.c u.s.c NAI-l v22 v

7 Case Doc 14 Filed 10/31/17 Page 7 of U.S.C U.S.C , U.S.C u.s.c u.s.c. 552(b)... 6, 41, U.S.C. 553(b) u.s.c. 726(b)..., U.S.C. 732(2)..._ U.S.C. 742(2) U.S.C U.S.C u.s.c U.S.C U.S.C U.S.C OTHER AUTHORITIES Fed. R. Bankr. P , 4, 63 Fed. R. Bankr. P , 4, 60, 61, 62 Local Rule passim Local Rule (m) VI

8 Case Doc 14 Filed 10/31/17 Page 8 of 72 The above-captioned debtors and debtors in possession (collectively, the "Debtors") hereby move this Court (the "Motion"), pursuant to: sections 105, 361, 362, 363(c), 363(e), 364(c), 364(d)(1), 364(e) and 507 oftitle 11 ofthe United State Code (the "Bankruptcy Code"); Rules 2002 and 4001 ofthe Federal Rules of Bankruptcy Procedure (the "Bankruptcy Rules"); and Rule ofthe Local Rules ofbankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware (the "Local Rules"), for the entry of an order, substantially in the form attached as Exhibit 1 (the "Interim Order"), and a final order (the "Final Order"): (i) authorizing certain of the Debtors (referred to herein as the "Obligors") 2 to obtain superpriority debtor-in-possession financing (the "DIP Facility"), pursuant to the terms set forth in that certain M&G Resins USA LLC Summary of Terms and Conditions for DIP Facility (the "DIP Term Sheet"), 3 a copy of which is attached as Annex A to the Interim Order, as such terms shall be definitively documented; (ii) granting liens and superpriority administrative claims; (iii) scheduling a final hearing with respect to the relief requested herein; and (iv) granting related relief. In support of this Motion, the Debtors respectfully represent as follows: Preliminary Statement 1. The primary factor that precipitated the commencement of these Chapter 11 Cases (as defined below) is massive cost overruns at the Debtors' partially completed polyethylene terephthalate ("PET") and purified terephthalic acid ("PTA") plant in Corpus Christi, Texas (the "Corpus Christi Plant"). Construction of the Corpus Christi Plant began in 2013 and was projected to be completed in December 2015 at a cost of $1.1 billion. To date, the Debtors have 2 The Obligors are all of the Debtors other than M & G Polymers USA, LLC, Mossi & Ghisolfi International S.a r.l., M&G Chemicals S.A. and M&G Capital S.a r.l.. Sheet. 3 Capitalized terms not otherwise defined herein have the meanings given to them in the DIP Term

9 Case Doc 14 Filed 10/31/17 Page 9 of 72 spent approximately $1.86 billion on construction of the plant, and it is estimated that a further $505 million is required to complete construction of the facility and bring it online. 2. These escalating cost overruns forced the Company to incur greater debt in an effort to complete the Corpus Christi Plant and commence operations at that facility. For a period of more than a year prior to the commencement of these Chapter 11 Cases, the Debtors searched for, and exhausted, every available avenue practically available to them to raise capital. Meanwhile, because the Corpus Christi Plant was not yet in operation, the Debtors and their affiliates were unable to meet their obligations to future customers of the Corpus Christi Plant and service their existing debt, which depended, at least in part, on the revenue that was expected to be generated by the Corpus Christi Plant's operations. 3. Ultimately, all of the Debtors' efforts to sustain their operations were insufficient. The allocation of capital to construction of the Corpus Christi Plant and spiraling debt strained the Debtors' liquidity and forced them to delay payments to raw materials suppliers. As the weeks and months progressed and past due balances grew, those suppliers became increasingly less willing to accept delayed payment terms from the Debtors. Many of the suppliers threatened to withhold or delay raw material shipments to the Debtors, and those vendors that remained willing to ship goods demanded cash on delivery. 4. By September 2017, construction at the Corpus Christi Plant was significantly reduced as a result of liquidity constraints. In addition, on September 5, 2017, the Debtors' Mexican affiliates were forced to shut down their PET plant in Altamira, Mexico (the "Altamira Plant") because it lacked necessary raw materials to continue production. The shutdown of the Altamira Plant further negatively affected the Debtors' operations, including, in particular, the operation of their PET manufacturing plant in Apple Grove, West Virginia (the "Apple Grove NAI-I v22-2-

10 Case Doc 14 Filed 10/31/17 Page 10 of 72 Plant"), which derived nearly 50% of its sales from PET resin produced by the Altamira plant. Although the Debtors maintained manufacturing operations at the Apple Grove Plant for several weeks following the shut down at the Altamira Plant, the Debtors' lack of liquidity eventually forced them to cease production at the Apple Grove Plant. 5. As a result of their exhaustive search for funding from many potential sources over the past year, it was apparent to the Debtors that additional financing would not be available to them outside of a chapter 11 proceeding. Accordingly, the Debtors commenced these Chapter 11 Cases to consummate a sale of substantially all of their assets (the "Sale") under the protections of the Bankruptcy Code. Given their extreme liquidity constraints, the Debtors require access to funds to prepare for and consummate the Sale and as well as to meet their other obligations arising during these Chapter 11 Cases. 6. The proposed DIP Facility consists of a senior term loan credit facility in the aggregate principal amount of$100 million among: (a) M&G Resins USA LLC, as borrower ("M&G Resins" or the "Borrower"); (b) the other Debtors, as guarantors (collectively, the "Guarantors" and, together with the Borrower, the "Obligors"); and (c) Control Empresarial de Capitales, S.A. De C.V. ("CEC") and/or its designee, as lender (in such capacity, the "DIP Lender"). CEC is an affiliate of Banco Inbursa, S.A., Instituci6n de Banca Multiple, Grupo Financiero Inbursa ("Inbursa"), the Debtors' prepetition lender with first liens on collateral including the Corpus Christi Plant and the Apple Grove Plant (in such capacity, together with its respective successors and assigns, the "Pre-Petition First Lien Lender"). 7. By entering into the proposed postpetition financing and granting the Pre-Petition First Lien Lender adequate protection in connection with the DIP Loans, the Debtors have obtained a source of funding that can assist them in preserving their assets pending the Sale and -3-

11 Case Doc 14 Filed 10/31/17 Page 11 of 72 help them to satisfy certain necessary obligations during these Chapter 11 Cases and maintain the staff necessary to continue certain administrative and corporate functions, all in an effort to maximize the value of their estates for the benefit of creditors by avoiding a liquidation scenario. The terms of the proposed DIP Facility are fair and reasonable in light of the circumstances and reflect a sound exercise of each Debtor's business judgment. Moreover, the DIP Facility presents the Debtors with the sole realistic source of funding available to them in light of their current situation. Immediate approval of the DIP Facility is therefore a critical and necessary step toward stabilizing the Debtors and preserving the value of their assets, without which the Debtors' ability to restructure and maximize the value of their estates would be jeopardized to the direct detriment of all parties in interest. Jurisdiction and Venue 8. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C. sections 157 and This is a core proceeding pursuant to 28 U.S.C. section 157(b). Venue for this matter is proper in this district pursuant to 28 U.S.C. sections 1408 and Relief Requested 9. The Debtors request entry of orders, substantially in the form of the Interim Order and the Final Order, pursuant to sections 105, 107, 361, 362, 363(c), 363(e), 364(c), 364(d)(l), 364(e) and 507 of Bankruptcy Code, Bankruptcy Rules 2002 and 4001 and Local Rule granting the following relief: (a) Accessing the DIP Loans- authority for the Obligors, on the terms set forth in the DIP Term Sheet, (i) to obtain post-petition financing, consisting of the DIP Facility in an aggregate principal amount of up to $100 million, from the DIP Lender and (ii) to draw funds under the DIP Facility in the aggregate amount of $20 million (the "Interim Funding Amount") upon entry of the Interim Order to avoid immediate and irreparable harm to the Obligors and their estates; -4-

12 Case Doc 14 Filed 10/31/17 Page 12 of 72 (b) (c) (d) (e) (f) Entry into the DIP Loan Documents - authority for the Obligors to execute and deliver additional documentation consistent with the terms of (or as may be required by) the DIP Term Sheet and the other DIP Loan Documents (as defined below), and to perform all such other and further acts as may be required under or in connection with the DIP Loan Documents, including executing and delivering the DIP Loan Documents, which final documents shall be in form and substance satisfactory to the DIP Lender and filed with the United States Bankruptcy Court for the District of Delaware (the "Court") no later than 10 business days prior to the hearing on the Final Order or such later date as may be agreed to by the DIP Lender and the Debtors; Use of Proceeds- authority for the Obligors to use the proceeds ofloans made by the DIP Lender (collectively, the "Loan Proceeds") as permitted in the DIP Loan Documents and in accordance with the Interim Order and the budget attached as Annex B to the Interim Order (as it may be amended or updated, the "DIP Budget"); Grant of Liens and Superpriority Claims - authority for the Obligors to grant automatically perfected (i) security interests in and liens on all of the DIP Collateral (as defined below) that prime the interests of certain pre-petition security interests on the terms set forth in the DIP Credit Documents, (ii) senior security interests in and liens on all Unencumbered Property (as defined below) and (iii) non-priming security interests in and liens on the DIP Collateral in which there are certain pre-existing permitted senior liens, in each case to the DIP Agent for the benefit of the DIP Lender to the extent provided herein, and granting superpriority administrative expense status to the DIP Obligations (as defined below), in each case subject to the Carve~Out (as defined below) and on the terms and subject to the relative priorities set forth in the DIP Loan Documents; Provision of Adequate Protection - authority for the Obligors to provide adequate protection to (i) the Pre-Petition First Lien Lender to the extent of any diminution in value of its interest in the Pre-Petition First Lien Collateral (as defined below) and subject to the Carve-Out, the DIP Liens (as defined below) and the Senior Prior Liens (as defined below) and (ii) the Pre-Petition Second Lien Secured Party (as defined below) to the extent of any diminution in value of its interest in the Pre-Petition Second Lien Collateral (as defined below) and subject to the Carve-Out, the DIP Liens, the Senior Prior Liens, the Adequate Protection Liens (as defined below) of the Pre-Petition First Lien Lender and the Pre-Petition First Lien Security Interests (as defined below); Payment of Obligations Under DIP Facility- authority for the Obligors to pay the principal, interest, fees, expenses, disbursements and other amounts payable under the DIP Loan Documents as such amounts become due and payable; -5-

13 Case Doc 14 Filed 10/31/17 Page 13 of 72 (g) (h) (i) Use of Cash Collateral- authority for the Obligors to use Loan Proceeds to the extent that such Loan Proceeds may be considered cash collateral within the meaning of section 363(c)(2) of the Bankruptcy Code ("Cash Collateral") solely as a result ofthe fact that such Loan Proceeds are held in bank accounts over which the DIP Agent may be granted a security interest; Modification of Automatic Stay- vacatur and modification of the automatic stay imposed under section 362 of the Bankruptcy Code to the extent necessary to implement and effectuate the terms and provisions of the DIP Loan Documents, including the Interim Order, Final Order and as otherwise provided herein; Section 506(c) and "Equities of the Case" Waiver- subject only to and effective upon entry of the Final Order, waiving the Obligors' ability to surcharge against any DIP Collateral pursuant to section 506(c) of the Bankruptcy Code and any right of the Obligors under the "equities of the case" exception in section 552(b) ofthe Bankruptcy Code; G) Schedule Interim Hearing - scheduling of an emergency hearing on this Motion for the Court to consider entry of the Interim Order, which authorizes the Obligors to borrow up to the Interim Funding Amount, in accordance with the terms of the DIP Loan Documents and Interim Order; (k) Schedule Final Hearing- scheduling of a final hearing (the "Final Hearing") on the Motion to consider entry of a Final Order authorizing the borrowings under the DIP Facility on a final basis and approval of notice procedures with respect thereto; and (1) granting certain related relief. Background I. General Background 10. On October 24, 2017 (the "Polymers Petition Date"), Debtor M&G Polymers USA, LLC ("M&G Polymers") filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code and, thereafter, on October 30, 2017 (the "Petition Date"), each of the other Debtors commenced chapter 11 cases before this Court (together with the chapter 11 case of M&G Polymers, the "Chapter 11 Cases"). The Debtors are continuing in possession of their properties and are managing their businesses, as debtors in possession, pursuant to sections 1107(a) and 1108 ofthe Bankruptcy Code. -6-

14 Case Doc 14 Filed 10/31/17 Page 14 of The Debtors, together with the non-debtor direct and indirect subsidiaries of M&G Chemicals S.A. (collectively, the "Company"), are one ofthe largest producers of PET resin for packaging applications in the world. PET is a plastic polymer produced principally from PTA and monoethylene glycol, and is used to manufacture plastic bottles and other packaging for the beverage, food and personal care industries. The Company's customers are major plastic packaging companies, including Amcor Limited, Coca-Cola Cross Enterprise Procurement Group, Graham Packaging Company LP and Pepsi-Cola Company. In addition, through Chemtex, its engineering division, the Company provides technological development, research and engineering services for the construction of plants for the polyester, renewables and liquefied natural gas industries. 12. Prior to the Polymers Petition Date, the Company employed over 950 people (including over 300 individuals employed by the Debtors) in 14locations in six countries around the world. The Company's three manufacturing facilities are located in Brazil, Mexico and Apple Grove, West Virginia. Its corporate headquarters is located in Luxembourg, and the overall management of the Company is conducted by senior executives and corporate personnel located in Luxembourg, Italy and Houston, Texas. 13. In April 2013, the Company began construction of the Corpus Christi Plant. When completed, the Corpus Christi Plant is expected to be the largest vertically integrated single line PTA/PET producer in the world and the largest PTA plant in the Americas. 14. Construction of the Corpus Christi Plant was originally scheduled to be completed by the end of2015, and the facility was expected to be fully operational in January As the project progressed, however, the Company was repeatedly required to adjust the planned schedule to account for (a) changes to the overall approach to construction of the plant due to NAJ v22-7-

15 Case Doc 14 Filed 10/31/17 Page 15 of 72 design and technical problems, (b) delays due to the weather, (c) subcontractors failing to meet deadlines and cost projections, (d) engineering audits and (e) delays in equipment delivery. As a result, the Corpus Christi Plant remains less than 85% complete. 15. Although the Company's revenue declined to $1.6 billion in from $1.9 billion in the Company was able to maintain steady margins and cash flow generation. Due to the delays and cost overruns at the Corpus Christi Plant, however, the Company has experienced a dramatic increase in its net indebtedness. Over the past three years, the Company has incurred nearly $1 billion in funded debt obligations to finance continued construction of the Corpus Christi Plant and to account for shortfalls in revenue that was expected to be generated by the Corpus Christi Plant. 16. These debt obligations, along with certain market forces, have placed severe liquidity constraints on the Company. When it became apparent that the Company could no longer operate without further funding, which was unavailable outside of chapter 11, the Debtors commenced these Chapter 11 Cases (a) to address their immediate liquidity needs and (b) to pursue and consummate a Sale that will preserve and maximize the value of the Debtors' assets (including going concern value) to the fullest extent possible. 17. Additional information regarding the Debtors, the proposed DIP Facility and these Chapter 11 Cases, including the Debtors' businesses, corporate structure, financial condition, is set forth in the Declaration of Dennis Stogsdill in Support of First Day Pleadings (the "First Day Declaration"), filed contemporaneously herewith and incorporated by reference herein. In support of this Motion, the Debtors also respectfully submit the declaration ofneil Augustine (the "Augustine Declaration") of Rothschild, Inc. ("Rothschild"), the Debtors' longstanding financial advisor and proposed investment banker in these Chapter 11 Cases. NAI-! v22-8-

16 Case Doc 14 Filed 10/31/17 Page 16 of 72 A copy of the Augustine Declaration has been filed contemporaneously herewith and is incorporated by reference herein. II. Overview of the Debtors' Prepetition Capital Structure 18. As of the Petition Date, the Debtors had outstanding debt in the aggregate principal amount of nearly $1.7 billion under eleven financing arrangements, each of which are described below. A. Pre-Petition First Lien Obligations 19. Pursuant to that certain Loan Agreement dated as of March 21, 2013 (as at any time amended or supplemented, the "Pre-Petition First Lien Loan Agreement"), the Pre-Petition First Lien Lender entered into a secured loan with Debtor M&G Resins as borrower, in a maximum principal amount of$590,000,000, ofwhich$436,000,000 has been advanced in accordance with the Pre-Petition First Lien Loan Agreement. The obligations under the Pre-Petition First Lien Loan Agreement are guaranteed by M&G Polymers (together with M&G Resins, the "Pre-Petition First Lien Loan Obligors") pursuant to that certain Guaranty dated as of March 21, 2013 by M&G Polymers for the benefit of the Pre-Petition First Lien Lender (as at any time modified, amended or restated, the "Pre-Petition First Lien Guaranty"). 4 On September 12, 2017, the Pre-Petition First Lien Lender and M&G Resins entered into the Fifth Amendment to the Pre-Petition First Lien Loan Agreement (the "Pre-Petition First Lien Loan Agreement Amendment") to permit the funding of $6,000,000 to M&G Resins to fund professional fees and working capital needs necessary to enable the Debtors to prepare for an orderly chapter 11 petition filing (the "September 2017 Advance"). Pursuant to the Pre-Petition First Lien Loan 4 The original maximum principal amount was $250,000,000 pursuant to the Pre-Petition First Lien Loan Agreement and was increased to a total of$390,000,000 pursuant to that certain Second Amendment to the Pre-Petition First Lien Loan Agreement dated as of July 29, 2016, and further increased to a total of$590,000,000 pursuant to that certain Fourth Amendment to the Pre-Petition First Lien Loan Agreement dated as of May 4,

17 Case Doc 14 Filed 10/31/17 Page 17 of 72 Agreement Amendment, the $6,000,000 was funded on September 13, Following the September 2017 Advance, the outstanding principal amount under the Pre-Petition First Lien Loan Documents is $436,000, Pursuant to that certain Deed of Trust, Assignment of Rents and Leases, Collateral Assignment of Property Agreements, Security Agreement and Fixture Filing (as at any time modified, amended or restated, the "Pre-Petition First Lien Security Agreement"), 6 dated as of March 21, 2013, and recorded as document number in the Official Public Records, Nueces County, Texas, executed by M&G Resins, as grantor, and the Pre-Petition First Lien Lender, as beneficiary, for the benefit of the Pre-Petition First Lien Lender, M&G Resins granted to the Pre-Petition First Lien Lender to secure all ofm&g Resins' obligations under the Pre-Petition First Lien Loan Documents, first priority liens on and security interests in the Collateral (as defined in the Pre-Petition First Lien Loan Agreement to include, generally, the Corpus Christi Plant and the Apple Grove Plant, among other things). 7 Additionally, the 5 The Pre-Petition First Lien Loan Agreement, the Pre-Petition First Lien Guaranty, the Pre-Petition First Lien Mortgage (as defined below), and the Pre-Petition First Lien Mortgage Guaranty (as defined below) together with any other agreement, note, instrument, guaranty, mortgage, fixture filing, deed of trust, security agreement, financing statement, pledge, assignment, forbearance agreement and other document executed at any time in connection therewith, in each case as the same may be amended, modified, restated or supplemented from time to time, are hereinafter referred to collectively as the "Pre-Petition First Lien Loan Documents." 6 The Pre-Petition First Lien Security Agreement was subsequently amended to increase the maximum amount secured by the mortgage in order to reflect the revised loan amount under the Pre-Petition First Lien Loan Agreement pursuant to that certain Second Amendment to the Pre-Petition First Lien Security Agreement dated as ofseptember 2, 2016 and that certain Third Amendment to the Pre-Petition First Lien Security Agreement dated as of June 29, Such liens and security interests collectively referred to herein as the "Pre-Petition First Lien Resins Security Interests," and all Collateral (as defined in the Pre-Petition First Lien Loan Agreement) in existence on the Petition Date and all products and proceeds thereof are collectively referred to herein as the "Pre-Petition Resins First Lien Collateral." "Collateral" is defined to mean the "Property" under and as defined in each of the Pre-Petition First Lien Security Agreement and the Pre-Petition First Lien Mortgage. "Property" under the Pre-Petition First Lien Security Agreement means, inter alia, certain fee estate and leasehold estate interests in real property located in Nueces County, Texas and described more fully therein, together with all improvements, fixtures, personalty, leases and rents thereon; easements and rights-of-way in respect thereof; mineral rights corresponding therewith; plans relating thereto; certain rights in and to specified intellectual property; rights in and to certain contracts including property agreements (including a pledge of the lease agreement with the Port of Corpus Christi Authority ofnueces County); rights in insurance policies and proceeds thereof; and accessions, additions, NAI-! v22 DOCS_DE: l 54032/

18 Case Doc 14 Filed 10/31/17 Page 18 of 72 Pre-Petition First Lien Guaranty is secured and, pursuant to that certain Cr~dit Line Deed of Trust, Assignment of Rents and Leases, Collateral Assignment of Property Agreements, Security Agreement and Fixture Filing (as at any time modified, amended or restated, the "Pre-Petition First Lien Guaranty Mortgage") 8 executed as of March 15, 2013 and effective as of March 21, 2013, and recorded in the Office ofthe Clerk ofthe County Commission of Mason County, West Virginia in Trust Deed Book 394, at Page 556, by M&G Polymers, as grantor, for the benefit of the Pre-Petition First Lien Lender, M&G Polymers granted to the Pre-Petition First Lien Lender to secure the Guarantee Obligations (as defined in the Pre-Petition First Lien Mortgage), first priority liens on and security interests in the Collateral (as defined in the Pre-Petition First Lien Mortgage) As of the Petition Date, the Pre-Petition First Lien Loan Obligors were indebted and liable under the Pre-Petition First Lien Loan Documents to the Pre-Petition First Lien Lender for: (a) the approximate principal amount of$436,000,000; and (b) fees, expenses, or other replacements and substitutions thereon. "Property" under the Pre-Petition First Lien Mortgage means, inter alia, certain real property located in Hannan District, Mason County, West Virginia and described more fully therein, together with improvements, fixtures, personalty, leases and rents; easements and rights-of-way in respect thereof; mineral rights corresponding therewith; plans relating thereto; rights in and to certain contracts including property agreements; rights in insurance policies and proceeds thereof; and accessions, additions, replacement and substitutions thereon. 8 The Pre-Petition First Lien Mortgage was subsequently amended to increase the maximum amount secured by the mortgage in order to reflect the revised loan amount under the Pre-Petition First Lien Loan Agreement pursuant to that certain Amendment to the Pre-Petition First Lien Mortgage dated as of September 2, 2016 and that certain Second Amendment to the Pre-Petition First Lien Mortgage dated as of June 29, Such liens and security interests are collectively referred to herein as the "Pre-Petition Polymers First Lien Security Interests" together with the Pre-Petition Resins First Lien Security Interests the... Pre-Petition First Lien Security Interests" and all Collateral (as defined in the Pre-Petition First Lien Mortgage) in existence on the Petition Date and all proceeds thereof being collectively referred to herein as the "Pre-Petition Polymers First Lien Collateral" and together with the Pre-Petition First Lien Resins Collateral and any other collateral securing the Pre-Petition First Lien Obligations, the "Pre-Petition First Lien Collateral"). -11-

19 Case Doc 14 Filed 10/31/17 Page 19 of 72 amounts due under the Pre-Petition First Lien Loan Documents (the "Pre-Petition First Lien Fees and Expenses"). 10 B. Pre-Petition Second Lien Obligations 22. Pursuant to the Corpus Christi Capacity Reservation Agreement, dated as of May 20,2015, by and among M & G USA Corporation ("M&G USA"), M&G Resins (together with M&G USA the "Pre-Petition Second Lien Obligors") and DAK Americas LLC (the "Pre-Petition Second Lien Secured Party") (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the "Pre-Petition Second Lien CRA"), the Pre-Petition Second Lien Secured Party has provided under the Pre-Petition Second Lien CRA monies in the amount of $435,000, Pursuant to the Pre-Petition Second Lien Documents, the Pre-Petition Second Lien Secured Party was granted a second-lien subordinated security interest on the Pre-Petition Second Lien Collateral (as defined below). The obligations under the Pre-Petition Second Lien CRA and the liens under the Pre-Petition Second Lien Documents are expressly subordinated to the Pre-Petition First Lien Loan Agreement pursuant to that certain Amended and Restated Subordination Agreement dated as of June 29, 2017 (as at 10 The Pre-Petition First Lien Fees and Expenses, together with all other obligations of each Pre-Petition First Lien Loan Obligor in respect of indemnities, guaranties and other payment assurances made or given to or by each Pre Petition First Lien Loan Obligor for the benefit of the Pre-Petition First Lien Lender, and all interest, fees, costs, legal expenses and all other amounts heretofore or hereafter accruing thereon or at any time chargeable to either Pre-Petition First Lien Loan Obligor in connection therewith, are collectively referred to herein as the "Pre-Petition First Lien Obligations." II The Pre-Petition Second Lien CRA and the Pre-Petition Second Lien Mortgage (as defmed below), together with any other agreement, note, instrument, guaranty, mortgage, fixture filing, deed of trust, security agreement, financing statement, pledge, assignment, forbearance agreement and other document executed at any time in connection therewith, in each case as the same may be amended, modified, restated or supplemented from time to time, are hereinafter referred to collectively as the "Pre-Petition Second Lien Documents." -12-

20 Case Doc 14 Filed 10/31/17 Page 20 of 72 any time modified, amended or restated, the "Subordination Agreement"), 12 by M&G Resins and the Pre-Petition Second Lien Secured Party in favor of the Pre-Petition First Lien Lender. 23. Pursuant to the Subordinated Deed of Trust, Assignment of Rents and Leases, Collateral Assignment of Property Agreements, Security Agreement and Fixture Filing, dated as of December 23, 2016 (as at any time modified, amended or restated) (the "Pre-Petition Second Lien Mortgage") by M&G Resins and the Pre-Petition Second Lien Secured Party, in favor of the Pre-Petition Second Lien Secured Party, M&G Resins granted to the Pre-Petition Second Lien Secured Party, for the benefit of the Pre-Petition Second Lien Secured Party and to secure all of the Pre-Petition Second Lien Obligors' obligations under the Pre-Petition Second Lien CRA, liens, pledges and security interests (collectively, the "Pre-Petition Second Lien Security Interests") in the Collateral (as defined in the Pre-Petition Second Lien Mortgage to include, generally, the Corpus Christi Plant, among other things) 13 granted pursuant to the Pre-Petition Second Lien Mortgage (the "Pre-Petition Second Lien Collateral" and together with the Pre-Petition First Lien Collateral, the "Pre-Petition Collateral"). 24. As of the Petition Date, the Pre-Petition Second Lien Obligors were indebted and liable under the Pre-Petition Second Lien Documents to the Pre-Petition Second Lien Secured Party for: (a) $435 million in outstanding upfront amount (the "Pre-Petition Second Lien 12 The Subordination Agreement amends and restates that certain Subordination Agreement dated as of December 23, "Collateral" is defined in the Pre-Petition Second Lien Security Agreement to mean "Property" under and as defined therein. "Property" under the Pre-Petition Second Lien Security Agreement means, inter alia, certain fee estate and leasehold estate interests in real property located in Nueces County, Texas and described more fully therein (but excluding certain "Excluded Property" specified more fully therein), together with all improvements, fixtures, personalty, leases and rents thereon; easements and rights-of-way in respect thereof; mineral rights corresponding therewith; plans relating thereto; certain rights in and to specified intellectual property; rights in and to certain contracts including property agreements (including a pledge of the lease agreement with the Port of Corpus Christi Authority ofnueces County); rights in insurance policies and proceeds thereof; and accessions, additions, replacements and substitutions thereon. -13-

21 Case Doc 14 Filed 10/31/17 Page 21 of 72 Principal"); 14 and (b) fees, expenses, or other amounts due under the Pre-Petition Second Lien Documents (the "Pre-Petition Second Lien Fees and Expenses"). 15 C. Lux Iubursa Loan 25. Debtor M&G International S.a r.l. ("M&G International") is party to a second loan agreement with Inbursa (as amended, the "Lux Inbursa Loan"), pursuant to which M&G International borrowed $120 million to fund its working capital needs. This loan was guaranteed by M&G Chemicals S.A. ("M&G Chemicals") and non-debtor affiliates, M&G Polimeros Brasil S.A. ("Polimeros Brazil") and M&G Polimeros Mexico S.A. de C.V. ("Polimeros Mexico"). The Lux Inbursa Loan is secured by liens on the Company's manufacturing facility in Suape, Brazil and certain equipment of Polimeros Brazil. D. Macquarie Credit Facility 26. M&G Waters USA, LLC ("M&G Waters") is the borrower under a $55.5 million secured credit facility by and among Macquarie Investments US Inc. (the "Macquarie Loan"), as administrative and collateral agent and the lenders from time to time party thereto. M&G Waters was formed to undertake the construction and operation of desalination equipment and boilers situated at the Corpus Christi Plant. The proceeds of the Macquarie Loan were used to partially finance the construction, installation and operation of such desalination equipment, a process that is largely complete. M&G Waters' obligations under the Macquarie Loan are guaranteed by 14 The initial amount of future capacity that was purchased by the Pre-Petition Second Lien Secured Party was $350 million, but subsequent purchases and amendments to the Pre-Petition Second Lien CRA increased these amounts to $435 million. 15 The Pre-Petition Second Lien Fees and Expenses, together with the Pre-Petition Second Lien Principal and all other obligations of any Pre-Petition Second Lien Obligor in respect of indemnities, guaranties and other payment assurances given to or by any Pre-Petition Second Lien Obligor for the benefit of the Pre-Petition Second Lien Secured Party, and all other interest, fees, costs, legal expenses and all other amounts heretofore or hereafter accruing thereon or at any time chargeable to any Pre-Petition Second Lien Obligor in connection therewith, are collectively referred to as the "Pre-Petition Second Lien Obligations"). -14-

22 Case Doc 14 Filed 10/31/17 Page 22 of 72 non-debtor M&G Finanziaria S.p.A. ("M&G Finanziaria") and secured by a lien on substantially all ofm&g Waters' assets and M&G USA's 100% equity interest in M&G Waters. E. Delta Lloyd Facility 27. M&G International is the borrower under a 70 million credit facility by and among Delta Lloyd Levensverzekering N.Y. and Delta Lloyd Life N.Y. as lenders. As of the Petition Date, $82.4 million remains outstanding under the Delta Lloyd Facility. These obligations are guaranteed by M&G Chemicals and secured by a pledge ofm&g International's equity interests in M&G USA and M&G USA Holding LLC. F. M&G Polymers' Revolving Credit Facilities 28. M&G Polymers is the primary obligor under a $10 million unsecured revolving loan with Banca Monte dei Paschi di Siena S.p.A, New York Branch (the "Monte dei Paschi Loan"). The Monte dei Paschi Loan is guaranteed by M&G International. As of the Polymers Petition Date the Monte dei Paschi Loan was fully drawn. 29. M&G Polymers is also the borrower under a $50 million revolving credit facility with Comerica Bank (the "Comerica Loan") with Comerica Bank ("Comerica") that is guaranteed by M&G International and M&G Chemicals. The Comerica Loan is secured by certain accounts receivable and inventory of M&G Polymers, among other collateral. 30. On October 20, 2017, Comerica filed a complaint in the United States District Court for the Eastern District of Michigan seeking the appointment of a receiver to take control of the collateral securing the Comerica Loan as well as certain of the Debtors' books and records (the "Complaint"). Comerica also sought injunctive relief to limit M&G Polymers' ability to access and use Comerica's collateral. Following the filing of the Complaint, the Debtors and Comerica engaged in negotiations in an effort to reach a consensual resolution that would allow the Debtors' continued access to certain cash for limited purposes. Ultimately, however, the -15-

23 Case Doc 14 Filed 10/31/17 Page 23 of 72 parties were not able to reach a resolution, and M&G Polymers commenced its chapter 11 case on the Polymers Petition Date to preserve estate assets in the days leading up to the filing of these Chapter 11 Cases. G. Sculptor Bonds 31. On March 23, 2016, the Company entered into two transactions with Sculptor Investments IV S.a r.l. ("Sculptor"), an affiliate ofthe Och-ZiffCapital Management Group. First, M&G International issued $72.5 million of floating rate secured bonds due 2019 (the "2019 Bonds") to Sculptor. M&G Polymers and non-debtor affiliates M&G Finanziaria, M&G Mexico Holding and Polimeros Mexico guaranteed the obligations outstanding thereunder. In addition, Mossi & Ghisolfi S.p.A. ("Mossi & Ghisolfi"), the ultimate parent company of the Debtors and their affiliates, pledged its equity in M&G Finanziaria, its direct subsidiary, as collateral for the obligations under the 2019 Bonds Second, Debtor M&G Capital S.a r.l ("M&G Capital") issued $37.5 million of floating rate secured bonds due 2023 (the "2023 Bonds" and, together with the 2019 Bonds, the "Bonds") to Sculptor. The 2023 Bonds are guaranteed by M&G Finanziaria and secured by equity pledges by Mossi & Ghisolfi and certain of its non-debtor direct and indirect subsidiaries. 33. On October 6, 2017, the Law Debenture Trust Corporation, the trustee for the Bonds, issued Notices of Acceleration, notifying M&G International, M&G Capital and the other bond obligors that Sculptor had declared Events of Default under the 2019 Bonds and 2023 Bonds and that, therefore, the Bonds and related guarantees had been accelerated and were immediately due and payable. These amounts remain outstanding as of the Polymers Petition Date. 16 M&G Capital Investments 2 S.a.r.l., a direct subsidiary ofm&g Finanziaria also pledged its equity in its direct subsidiary M&G Capital2 S.a.r.l. to secure the outstanding 2019 Bonds obligations. -16-

24 Case Doc 14 Filed 10/31/17 Page 24 of 72 H. Banco do Brasil Loan 34. In July of this year, the Company obtained an additional $35 million to be used for general corporate purposes pursuant to a senior secured term loan agreement by and among M&G Resins, as borrower, M&G Chemicals, as guarantor, and Banco do Brasil S.A., New York Branch as lender and administrative and collateral agent. M&G Resins pledged certain of its unencumbered property, including certain receivables and proceeds from specified sales contracts to secure the loan. I. ICBC Loan 35. M&G Resins is the borrower under a $350 million unsecured credit facility with Industrial and Commercial Bank of China Limited (the "ICBC Loan") to be used to finance the initial construction of the Corpus Christi Plant. M&G Resins's obligations under the ICBC Loan are guaranteed by M&G Chemcials. As of the Petition Date, the full $350 million remains outstanding under the ICBC Loan. J. Guarantee Obligations 36. In addition to the foregoing primary obligations of the Debtors, certain of the Debtors are guarantors of debt obligations incurred by their non-debtor affiliates. Specifically, M&G Polymers and M&G International have guaranteed obligations owing by non-debtor Polimeros Mexico under an $80 million revolving loan provided by Banco Mercantil del Norte, S.A. M&G International has also guaranteed Polimeros Brazil's obligations to (a) under a R$7.3 million loan provided by Banco Inbursa de Investimentos S.A. and (b) a series ofloans provided by Banco do Brasil S.A. up to the amount of $55 million. Finally, M&G International, M&G Polymers and M&G Resins have guaranteed floating-rate notes issued by non-debtor M&G Finance Luxembourg S.A. in the outstanding principal amount of 66.9 million. -17-

25 Case Doc 14 Filed 10/31/17 Page 25 of 72 K. Additional Unsecured Debt 37. In addition to the funded debt obligations described above, due to the severe liquidity constraints the Debtors were experiencing prior to the filing of these Cases, the Debtors owe significant amounts to their raw materials suppliers. As of the Petition Date, the Debtors estimate that they owe approximately $250 million in past due amounts to their suppliers. L. Intercompany Obligations 38. The Company historically has operated as one globally integrated business and, in the ordinary course of business, the Debtors and their affiliates generate intercompany payables and receivables. As of the Petition Date, the Debtors estimate that they owe $1.27 billion in intercompany payables in the aggregate and hold $556 million in intercompany receivables in the aggregate. Additionally, several of the Debtors are borrowers and/or lenders to a series of intercompany loans. A chart listing these obligations is attached to the First Day Declaration as Exhibit B. III. The Debtors' Immediate Need for Liquidity 39. The delays and cost overruns at the Corpus Christi Plant are the primary cause of the Company's liquidity crisis, which ultimately led to the filing of these Chapter 11 Cases. The Company initially projected that it would complete construction of the Corpus Christi Plant in December 2015, at a cost of$1.1 billion. As construction progressed, however, the Company was repeatedly required to adjust the planned schedule and budget to account for (a) changes in the overall approach to construction of the plant due to design and technical problems, (b) delays due to the weather, (c) subcontractors failing to meet deadlines and cost projections, (d) engineering audits and (e) delays in equipment delivery. To date, the Company has spent $1.86 billion on construction of the Corpus Christi Plant and it is estimated that a further $505 million is required to complete construction and render the facility fully operational. DOCS_DE:2159! /

26 Case Doc 14 Filed 10/31/17 Page 26 of By far the most significant factor contributing to the cost overruns and delays at the Corpus Christi Plant is higher than expected construction costs. Although equipment costs remained within budget for the project, labor costs far exceeded expectations. Specifically, due to market forces and low productivity, labor costs for construction of the Corpus Christi Plant have averaged about $104 per hour, compared with the $55-60 per hour that was budgeted. Last December, delays and labor costs further increased, when one of the Debtors' major subcontractors stopped working without proper justification These escalating cost overruns forced the Company to incur greater debt in the year leading up to the filing of these Chapter 11 Cases in an effort to complete the Corpus Christi Plant and commence 'operations at that facility. Specifically, as noted above, the Debtors borrowed additional amounts under the Pre-Petition First Lien Credit Agreement, sold additional incremental future capacity to the Pre-Petition Second Lien Secured Party under the Pre-Petition Second Lien CRA and issued the 2019 Bonds and 2023 Bonds with the expectation that the funds generated would be sufficient to fund working capital expenditures and completion of construction of the Corpus Christi Plant. 42. Ultimately, however, these measures were insufficient. Rising construction costs not only increased the cost to complete the Corpus Christi Plant, but the attendant delays in completion of the facility meant that the Debtors were unable to generate revenue from the sale of PET resin that they expected to be able to produce in 2016 and These circumstances, when coupled with other market forces-including (a) higher raw material costs due to supply shortages, (b) a recent wave of competing low-priced 17 This dispute is the subject of pending arbitration proceedings that have been stayed by the filing of these Chapter 11 Cases. -19-