September 8, 2008 WSJ

Huntsman Holders Make New Attempt To Close Hexion Merger

Huntsman Corp. shareholders, including some major hedge funds, made on Monday a new offer of at least $416.5 million to close the chemical company's merger with rival Hexion Specialty Chemicals Inc.

The latest offer comes after Hexion, which is owned by private-equity firm Apollo Management LP, rejected an earlier offer of at least $500 million by the shareholders late last month.

Huntsman family shareholders Monday also have agreed to make a cash payment to the so-called backstop payment of at least $416.5 million.

In a letter to Huntsman, the shareholders -- including Citadel Investment Group and D.E. Shaw -- said they are offering a new proposal because they can't implement the earlier one without Hexion's involvement. The backstop commitment is being made to Huntsman.

"This backstop commitment will not provide the same amount of cash to the combined company as the [earlier] financing, but it has the advantage of not requiring the same involvement from Hexion," the investors said in a filing with the Securities and Exchange Commission Monday.

The new commitment expires Thursday, and Huntsman quickly sent another letter to Hexion on Monday, seeking Hexion's permission to accept the latest offer. When Hexion rejected the financing offer of at least $500 million, it said it isn't seeking to renegotiate the merger but to terminate it.

Hexion and Huntsman have clashed over the acquisition agreement reached before the credit crunch hit last summer. The deal price was $28 a share, or $6.5 billion, plus about $4 billion of assumed debt.

Huntsman's fortunes have stumbled since the merger was agreed upon, but Huntsman still wants the deal to be upheld. Huntsman shares closed Friday at $13.02.

Huntsman has asked the Delaware Court of Chancery to declare that Hexion must go through with the buyout. In June, Apollo has requested the court declare the deal dead because of Huntsman's weak financial condition.

Apollo's move prompted a suit from Huntsman that accused the private-equity firm and two of its co-founders, Leon Black and Joshua Harris, of fraudulently inducing Huntsman to break its $5.6 billion takeover by Dutch rival Basell Holdings last July.

The court is slated to begin hearing on the case later this month.

2008/9/8　Hexion

Hexion comments on revised proposal by Huntsman shareholders
　　Proposal would not make the combined company solvent

Hexion Specialty Chemicals, Inc. today issued the following statement in response to a Report on Schedule 13D filed by several shareholders of Huntsman Corporation with the Securities and Exchange Commission.

"Today's proposal by Jon Huntsman and certain other Huntsman shareholders, received only hours prior to the beginning of the Delaware trial, does not come close to closing the funding gap or making the combined company solvent. As DE Shaw knows because it has received confidential information from Hexion pursuant to a confidentiality agreement signed only last Thursday, neither the $500 million of financing reflected in the prior CVR proposal, nor the $416 million reflected in this morning's proposal, is remotely sufficient to result in the combined company being solvent. Of course, the Hexion board will study this proposal. We would encourage Huntsman shareholders to read our pretrial brief in the Delaware action which will provide them with the necessary facts to conclude on their own that this proposal would not make the combined company solvent. The pretrial brief will be filed on a Form 8-k later today."

Sept. 11, 2008 　marketsmediaonline.com

Hexion Cool to Huntsman Proposal

Chemical company Hexion on Thursday responded to a last ditch effort by hedge funds to salvage a merger with Huntsman Corp., but Hexion is not optimistic the deal can be saved.

Hedge fund firm D.E. Shaw & Co. has been pushing for the merger and even offered to provide financing to help complete the deal. Hexion, which is owned by the private equity firm Apollo Group, originally approved the merger, then backed out, saying Huntsman had underperformed so badly that merging the two would render the combined company insolvent.

On Monday, several Huntsman shareholders, including D.E. Shaw and fellow hedge fund firm Citadel Investment Group, presented a new merger proposal they said would ensure the combined company would indeed be solvent. Hexion was initially cool to the idea, but on Thursday morning William Carter, chief financial officer of Hexion, sent a public letter to Huntsman that seemed to leave open the door for the merger if Huntsman can prove it will work.

"As you know, we do not believe the backstop payment in its current form, including the amount contemplated, will either close the initial funding gap for the merger and the related transactions, or have any impact on the solvency of the combined company," Carter wrote.

Still, Carter said Hexion is consenting to Huntsman entering into its proposed commitments with its shareholders provided certain terms are met. He also said Hexion currently has insufficient information to understand the revised plan and looks forward to receiving more complete details about the matter.

D.E. Shaw owns about 9.3 percent of Huntsman. On Wednesday, Citadel disclosed it has a 7.96 percent stake in the company.

Sept. 10, 2008　Bloomberg News

Testimony: Huntsman never saw negative merger doc

Huntsman Corp., the chemical maker seeking to force completion of a buyout by Hexion Specialty Chemicals Inc., never received an official report from advisers showing the combined company would be insolvent, a banker said.

Merrill Lynch & Co. bankers reviewed whether the new company would face solvency problems, Patrick Ramsey, the Merrill executive who led Huntsman's advisory team, testified today in Delaware Chancery Court. The New York-based firm didn't formally conclude the combined company would be insolvent, he said.

"I never made a representation that Merrill Lynch would deliver a formal solvency opinion," Ramsey said at the trial of Hexion's lawsuit seeking to cancel the buyout. "It's not something we do in our business practice."

Hexion is a unit of Apollo Management LP. The combined company would be one of the world's largest specialty-chemical makers, with annual sales exceeding $14 billion, 21,000 employees and 180 facilities, according to New York-based Apollo. Columbus, Ohio-based Hexion is the top producer of adhesives used in plywood and Salt Lake City-based Huntsman is the world's biggest maker of epoxy adhesives.

Hexion and Apollo officials contend a downturn in the chemical industry and operational problems within Huntsman gave them the right to renege on the buyout. Huntsman is seeking at least $3 billion in damages if the deal isn't completed.

Huntsman fell 25 cents, or 2 percent, to $10.99 in New York Stock Exchange composite trading at 12:01 p.m. The shares have fallen 57 percent this year.

2008/9/11 forbes

Huntsman says Hexion deal would be advantageous

The head of chemical maker Huntsman Corp. believes a proposed $6.5 billion buyout by Hexion Specialty Chemicals would be advantageous to both companies.
Peter Huntsman was testifying in a battle in Delaware Chancery Court that will decide whether Hexion must go through with its a $28-per-share buyout offer.
Hexion announced in June that it was dropping the deal because Huntsman's deteriorating finances no longer made it viable. Hexion is suing Huntsman to free itself of the deal and a $325 million breakup fee.
Huntsman says the combined company would be one of the world's largest specialty chemical companies, and would have an expanded global presence and significant purchasing power.
Huntsman says the delayed deal has created uncertainty among employees, customers and suppliers. He says business could be lost if suppliers look for customers elsewhere.
Huntsman's shares rose 85 cents to $11.68 in early afternoon trading Thursday.

2008/9/11 AP

Huntsman CEO supports deal with Hexion

The proposed $6.5 billion buyout of chemical company Huntsman Corp. by Hexion Specialty Chemicals would be advantageous to both companies, Huntsman chief executive Peter Huntsman said Thursday.

Testifying in a court battle that will decide whether Ohio-based Hexion should be forced to go through with its a $28-per-share buyout offer, Huntsman also asserted that the combined company could be operated as a viable entity, despite significant debt resulting from the highly leveraged buyout.

Hexion, an affiliate of Apollo Management LP, announced in June that it was backing away from the deal because Huntsman's deteriorating finances no longer made it viable. Hexion, which maintains that a combined company would be insolvent, is suing Utah-based Huntsman in Delaware to free itself of the deal and a $325 million breakup fee.

Huntsman testified that there would be significant benefits in creating what would be one of the world's largest specialty chemicals, and that the combined company would have an expanded global presence and increased purchasing power.

"I saw a great deal of advantages," he said, noting that the delay in closing the deal has created uncertainty among Huntsman's employees, customers and suppliers, and that business could be lost if suppliers look for customers elsewhere.

While Hexion chief executive Craig Morrison testified that synergies resulting from the merger would be limited to about $250 million, Huntsman said that was merely "a good start," and that the revenue and cost benefits compared to two stand-alone companies could exceed $400 million.

Huntsman said higher raw material costs and foreign currency exchange rates have resulted in a drag on earnings, but that his company still has strong positions in all of it core businesses, including a polyurethane division that accounts for more than half of its earnings before interest, taxes, depreciation, and amortization.

In his cross-examination, Hexion attorney Peter Hein noted that even as a buyout was being arranged in June 2007, Huntsman failed to provide Hexion with updated earnings projections for 2007 that showed downward revisions for its pigment business.

"We had made the decision not to do," Huntsman said.

Hein also noted that other chemical companies that have been hit by increases in raw material costs have performed better than Huntsman.

2008/9/30 Huntsman

Huntsman Obtains Temporary Restraining Order Against Credit Suisse and Deutsche Bank : Court Orders Banks to Not Impair or Terminate Merger Financing Prior to a Full Hearing

Huntsman Corporation today sued affiliates of Credit Suisse and Deutsche Bank (the "Banks"), lenders who had signed an agreement committing them to finance the merger of Huntsman and Hexion Specialty Chemicals, Inc.  The lawsuit, filed in Montgomery County, Texas, alleges that the Banks were conspiring with Apollo Management, L.P. to interfere with Huntsman's previous merger agreement with Basell, interfere with a later Merger Agreement with Hexion and usurp for their own benefit substantial and valuable rights that belonged to Huntsman.  Huntsman requested temporary and permanent injunctive relief to prevent the Banks from continuing to interfere and thwart Huntsman's rights under the Merger Agreement with Hexion.

This afternoon, District Judge Fred Edwards of the Montgomery County Texas District Court awarded a Temporary Restraining Order in favor of Huntsman.  Judge Edwards found that irreparable harm would result if the Banks were not immediately enjoined from terminating their financing commitment pending a full hearing on Huntsman's request for a temporary injunction.  Accordingly, Judge Edwards ordered that the Banks, among other things, must not take any action that could reasonably be expected to materially impair, delay, terminate, or prevent consummation of the financing contemplated by the agreement between the Banks and Hexion.

Commenting on this latest court victory, Huntsman's President and CEO, Peter R. Huntsman, stated, "We are grateful for today's decision by Judge Edwards, which comes on the heels of Vice Chancellor Lamb's decision yesterday to similarly enjoin Apollo and Hexion from further attempting to not comply with the terms to which Hexion had agreed.  We believe these two court rulings will allow the parties to move quickly to consummate the financing and the merger."

2008/9/30 Forbes

Huntsman All But Wins Fight

Hexion may have billionaire Leon Black, but Huntsman has the law on its side.

On Tuesday, shares of chemical maker Huntsman soared 71.7%, or $5.27, to $12.62, in late-afternoon trading, after the Delaware Court of Chancery in Wilmington rejected Black's Apollo Management and its unit Hexion Specialty Chemicals' attempt to pull out of its $10.6 billion deal to acquire Huntsman.

In his ruling, Judge Stephen Lamb said if the deal did not close by Oct. 1, the termination date for the merger would be extended until the court determined that Apollo and Hexion had complied with the order.

That's not to say Hexion has to close the deal. The judge said if the company refuses to close, it would be liable to Huntsman for damages not capped by the $325.0 million break-up fee.

Huntsman said that in addition to denying the relief sought by Apollo and Hexion, the court also found that Hexion had breached a number of obligations and covenants under the merger agreement. Huntsman said it continued to seek damages exceeding $3.0 billion in its Texas lawsuit against Apollo and its partners Leon Black and Joshua Harris.

Huntsman said on Tuesday it sued affiliates of Credit Suisse and Deutsche Bank, the banks which had agreed to finance the deal, claiming they were "conspiring with Apollo ... to interfere" with the deal, among other things.

Despite the decision, which came late Monday, the year-long saga may not be over as Hexion said it was reviewing the decision and its options. Still, Joel Greenberg, a partner at Kaye Scholer who specializes in mergers and acquisitions, believes the court ruling would be difficult to overturn on appeal.

The dispute dates back to the height of the private equity boom July 2007, when Huntsman tore up an offer from Russian-American billionaire Leonard Blavatnik in favor of a higher offer Apollo. (See "Huntsman Goes With Apollo.") Huntsman's board approved Apollo's $28.00 a share offer after Basell failed to raise its $25.25 bid.

Things went sour. Like many chemical companies, Huntsman suffered from rapidly escalating petroleum costs, which is used as a raw material, to power its processes and transport its goods.

In June, Hexion said the increased debt held by Huntsman was complicating a deal reached before the credit crunch made financing more difficult. Hexion filed suit against Huntsman, contending that the company's deteriorating financials should nullify its $28.00-a-share acquisition agreement. (See "Huntsman Hammered As Hexion Tries To Escape."). Huntsman countersued.

At the time the terms were agreed upon, it was considered a best-of-breed merger combining complementary companies at a fair price. Huntsman and Hexion have epoxy-resin businesses, and their other units have some degree of application and technology overlaps. Unfortunately, common interest just doesn't appear to be enough to keep this couple together.

2008/9/29 Huntsman

Huntsman Wins Decisively in Delaware Trial
Court Orders Hexion to Take All Actions Necessary and Proper to Consummate Merger

Huntsman Corporation today announced the decision of the Delaware Court of Chancery to enter judgment in favor of Huntsman Corporation denying all declarations sought by Apollo Management, L.P. and Hexion Specialty Chemicals, Inc. in their suit requesting that the Chancery Court excuse Hexion from its obligation to consummate the pending transaction. 

Apollo and Hexion had alleged that Huntsman was not entitled to a $325 million break up fee and had suffered a Material Adverse Effect since signing the Merger Agreement and that a solvency certificate or opinion could not be provided for the combined Hexion/Huntsman entity at the closing.  Both allegations were soundly rejected by the Chancery Court.

The Chancery Court ordered Hexion to specifically perform its covenants under the Merger Agreement, including the obligation to use its reasonable best efforts to take all actions necessary and proper to consummate the Merger in the most expeditious manner practicable.  The Court further ordered that if the Closing has not occurred by October 1, the Merger Agreement Termination Date shall be extended until the Court determines that Hexion has fully complied with the Court's order.

Commenting on Vice Chancellor Stephen P. Lamb's decision, Peter R. Huntsman, President and CEO of Huntsman Corporation, stated, "We are gratified that Apollo's allegations and tactics have failed to persuade the Chancery Court.  Huntsman is a strong and dynamic company ? indeed a global leader in many of its markets ? and Apollo's misguided attempt to use 2008's turbulent energy and financial markets to construct a solvency issue where none existed has now been exposed.  We call on Hexion to complete the remaining actions required by the Merger Agreement in compliance with the Court's order and proceed to closing."

In addition to denying the relief sought by Apollo and Hexion, the Chancery Court also found that Hexion had breached a number of obligations and covenants under the Merger Agreement, and that such breaches were knowing and intentional and directed by Apollo. 

Jon M. Huntsman, Founder and Chairman of Huntsman Corporation, added, "We have claimed all along that Apollo would resort to any means necessary to break a legal and binding contract.  Apollo was dishonest and untruthful and lost the case."

Huntsman continues to seek damages exceeding $3 billion in its Texas lawsuit against Apollo and its partners Leon Black and Joshua Harris.

October 2, 2008　 Hexion

Hexion Specialty Chemicals Receives U.S., European Antitrust Clearance For Its Proposed Merger With Huntsman Corporation

Hexion Specialty Chemicals, Inc., announced today that it has received clearance from the U. S. Federal Trade Commission (FTC) of its proposed acquisition of Huntsman Corporation.

The FTC accepted a consent order that requires Hexion to divest part of its specialty epoxy resin production and development capabilities to Spolek Pro Chemickou a Hutni Vyrobu, Akciova Spole nost (Spolek). In addition, the European Commission, which previously had approved the acquisition conditioned upon the same divestiture, has approved sale of the divested business to Spolek.

Hexion Chairman and CEO Craig O. Morrison said: "We are pleased to obtain the necessary antitrust approvals to complete the merger, as required in our merger agreement with Huntsman."

2008/9/19　Spolchemie

Spolchemie has signed an agreement with Hexion for the purchase of Hexion specialty epoxy business

Spolchemie, Czech synthetic resins manufacturing company announced today agreement of the terms of sale of Hexion Specialty Chemicals' specialty epoxy business to CHS RESINS, a newly formed daughter company of Spolek pro chemickou a hutni vyrobu, a.s. /Spolchemie/. CHS RESINS is buying Hexion's epoxy production facilities at Stuttgart and Duisburg in Germany, and manufacturing sites at Argo, Illinois and Norco, Louisiana in the United States, as well as the U.S. Research Center in Houston. The sale is contingent on U.S. Federal Trade Commission and European Commission approvals and on the closing of Hexion's merger agreement with Huntsman Corporation.

NYT 2008/10/9 　　

Firm Offers $540 Million Toward Deal in Chemicals

Apollo Management, the private equity giant, offered to pay $540 million on Thursday to help close the $6.5 billion merger between its subsidiary, Hexion Specialty Chemicals, and a rival chemical maker, the Huntsman Corporation.

The offer was an effort to prod banks that have committed to financing the deal to live up to their lending agreements, a difficult task given the unsettled credit markets.

Shares in Huntsman surged 28 percent to $11.64 on Thursday, as investors hoped that an end was in sight for one of the most bruising battles over a private equity deal in recent years.

Negotiations for the deal, which was struck in July 2007, have been bogged down by a fight in Delaware courts, where a judge prevented Hexion from backing out and ordered it to make its "reasonable best efforts" to complete the merger.

Devised at the height of the credit boom, the Huntsman-Hexion merger was to be financed mostly with debt, including a loan package of more than $15 billion, to be provided by Credit Suisse and Deutsche Bank.

But banks have grown more recalcitrant about committing to lending agreements since then, as they have been largely unable to resell the loans and bonds used to finance leveraged buyouts without incurring a loss. Court fights erupted this year over the issue, ensnaring deals like the takeovers of Bell Canada and Clear Channel Communications. Both of those legal battles ended in settlements.

Hexion and Apollo filed a lawsuit in the Delaware Court of Chancery in June, arguing that Huntsman's financial health had deteriorated drastically amid rising commodities prices and a declining economy. If the deal were to go through, Hexion and Apollo argued, the combined company would be insolvent.

But Vice Chancellor Stephen P. Lamb of the Delaware court ruled that Hexion had "knowingly and intentionally" violated its agreements with Huntsman, and ordered the company to find a way to finance the deal. Huntsman has since sued Credit Suisse and Deutsche Bank in a Texas state court, seeking to prevent them from interfering with the merger.

With its $540 million equity contribution, Apollo is probably seeking to reassure banks that the combined company would remain solvent.

"We are grateful for Apollo's support as we continue to work towards closing the Huntsman transaction," Craig O. Morrison, Hexion's chief executive, said in a statement.

In addition to the $540 million, Apollo has agreed to waive a transaction fee of about $100 million. In a statement, Hexion said that Apollo's capital infusion was "not required by any current contractual obligation."

A Huntsman spokesman said the company was pleased by Apollo's offer. "We said all along and continue to believe that the combined entity will be solvent," the spokesman, Russ Stolle, said. "We are working and cooperating with Hexion on actions to be taken under the merger agreement prior to closing."

Spokesmen for Credit Suisse and Deutsche Bank declined to comment.
More Articles in Business ≫ A version of this article appeared in print on October 10, 2008, on page B4 of the New York edition.

2008/10/27 Hexion

Hexion Specialty Chemicals announces additional funding commitments to support merger with Huntsman Corporation
Apollo Increases Cash Equity Investment to $750 Million
Additional Commitment from Certain Huntsman Stockholders Increases Commitment to $677 Million

Hexion Specialty Chemicals, Inc. announced that it continues to proceed expeditiously to close its merger with Huntsman Corporation. Hexion has been informed that certain stockholders of Huntsman agreed to make an additional cash commitment to Huntsman of approximately $217 million, conditioned upon closing of the merger. Together with the other commitments announced by Huntsman on September 11, 2008 or received by Huntsman subsequent to that date, the additional commitment announced today raises the total amount of committed payments from Huntsman stockholders to approximately $677 million.
In addition, investment funds managed by affiliates of Apollo Management, L.P. have agreed to make an additional cash equity investment of $210 million in Hexion. Together with the $540 million cash equity investment announced by Hexion on October 9, 2008, investment funds managed by affiliates of Apollo Management, L.P. have now agreed to make an aggregate cash equity investment of $750 million in Hexion. The new cash equity investment is not required by any contractual obligation of Hexion or Apollo. The cash equity investment is conditioned upon closing of the merger and the funding of the Huntsman stockholder commitments noted above.
Commenting on these actions, Craig Morrison, Chief Executive Officer of Hexion, said, "We are grateful for Apollo's continued support and for the support of Huntsman's shareholders. Hexion is ready to close the Hexion Huntsman merger and, if our lenders fail to provide the funding pursuant to their commitment letters, Hexion intends to diligently enforce its rights against them."
A representative from Apollo Management, L.P. said, "Apollo Management is fully supportive of the transaction and positive about the potential prospects for the combined Hexion Huntsman company."

2008/10/24 Huntsman

Huntsman Obtains Solvency Opinion for Hexion Merger : Independent Valuation Firm Concludes Hexion-Huntsman Combination Would be Solvent

Huntsman Corporation announced it has received a written opinion from American Appraisal, a leading valuation firm, which has concluded that the company to be formed from the pending merger of Hexion Specialty Chemicals, Inc. and Huntsman Corporation would be solvent. Specifically, American Appraisal found that the combined Hexion-Huntsman company would satisfy all of the solvency tests commonly used in transactions of this nature.

Huntsman's President and CEO, Peter R. Huntsman, stated, "American Appraisal is a well regarded and highly qualified valuation firm. As Vice Chancellor Lamb noted in his decision following the Delaware trial, Credit Suisse testified during the trial that they are prepared to fund their commitment ‘if a compliant solvency certificate can be provided' at the closing. We plan to do so, and with an independent opinion to which no reasonable lender, acting in good faith, could object."

Huntsman expects to request an updated solvency opinion from American Appraisal for delivery on the closing date, to satisfy the condition contained in Hexion's agreement with affiliates of Credit Suisse and Deutsche Bank.

About American Appraisal

American Appraisal is a leading valuation and related services firm that provides expertise in all classifications of tangible and intangible assets. It is comprised of more than 900 employees, operating from major financial cities throughout Asia-Pacific, Europe, North and South America. American Appraisal's opinion was provided solely for the use and benefit of Huntsman in connection with the pending merger with Hexion, is subject to various assumptions, limitations and qualifications, does not constitute advice or a recommendation to any person with respect to the pending merger with Hexion or any other matter and may not be relied upon by any other person.

2008/10/29 AP

Banks ditch Hexion's $6.5B buyout of Huntsman

Two banks funding a buyout of Huntsman Corp. have backed out of the $6.5 billion deal, which grew increasingly rancorous as the economy worsened.

Credit Suisse and Deutsche Bank told Hexion Specialty Chemicals late Monday that the combined company no longer meets standards set when the deal was crafted in July 2007.

The buyout was slated to close Tuesday.

The banks rejected an outside appraisal, released last week, that found the combined company could remain solvent in the current economic climate.

"We have advised Hexion that neither the draft American Appraisal solvency opinion nor the draft solvency certificate of Huntsman's CFO is customary and reasonably satisfactory," the banks said in a joint statement. "Aspects of the methodology, assumptions and depth of information utilized in the solvency analysis have left the banks with serious reservations."

At the height of the a buyout frenzy in the summer of 2007, Credit Suisse and Deutsche Bank agreed to finance the Hexion-Huntsman deal with a $15.35 billion debt package.

"They committed to finance this transaction in a very different environment," said John Rogers, an analyst at Moody's Investors Service.

If the deal goes through, the banks may record a substantial mark down, Rogers said.

Hexion said it would hold the banks to the original agreement.

"Hexion strongly disagrees with the banks' position and has advised them of their obligation to fulfill the financing commitment for the merger," Columbus, Ohio-based Hexion said in a statement. "While Hexion intends to meet and work with the banks today to try to complete the merger, if the banks do not fund their commitment, Hexion will vigorously enforce all of its contractual rights."

A Texas appeals court last week sided with Huntsman when it blocked efforts by the two banks to file lawsuits that could prevent the takeover. The banks said that allowing the buyout to go forward could render Hexion unable to pay off existing debts.

Hexion, an affiliate of private equity firm Apollo Management LP, tried to back out of the deal as recently as last month as Huntsman's financial condition worsened.

Huntsman sued, and a Delaware court ordered Hexion to try to complete the acquisition.

It has become increasingly difficult to arrange financing for mergers and acquisitions as the global credit crisis spreads.

"Banks are trying to conserve capital," said Bart Narter, a banking analyst at Celent. "(They) aren't looking to lend money to each other, let alone private equity."

Instead, financial institutions are working to shore up their balance sheets as the economy sours, he said.

In an attempt to nudge Credit Suisse and Deutsche Bank to fund the deal, both Hexion and Huntsman have put up more capital.

Apollo Management raised approximately $750 million, and Huntsman shareholders said Monday they would put up $217 million cash ? bringing their total commitment to $677 million ? if the deal closes.

BB&T Capital Markets analyst Frank Mitsch said the case will likely end up in New York courts, though Credit Suisse and Deutsche Bank "are not strangers to settling litigation."

"With the courts repeatedly ruling Huntsman's way, and as both parties continue to make financing concessions, we believe there are positive signs," he said in a note to clients.

Mitsch rates Huntsman as "Buy" with a 12-month price target of $28, implying he expects the stock to more than double in value from Monday's $12 close.

Shares of Huntsman rose 28 cents, or 2.3 percent, to $12.28 amid a broader market rally. Since the buyout was first announced on July 11, 2007, shares of Huntsman have dropped 56 percent.

Oct 29, 2008　Reuters

Hexion sues banks to try to fund Huntsman deal

A unit of private equity firm Apollo Management LP has sued two banks that refused to finance its $6.5 billion leveraged buyout of chemical company Huntsman Corp.

Apollo unit Hexion Specialty Chemicals sued Credit Suisse Group AG and Deutsche Bank AG on Wednesday in the Supreme Court of the State of New York, alleging the banks breached their obligations under the financing commitment letter for the deal.

The firm said it hopes the court will compel the banks to fund the merger.

In the lawsuit, Hexion argued that the commitment letter from the bannks gives them "virtually no 'outs' .. including no outs based on changes in circumstances in the economy generally, interest rates, debt markets, or the business of Hexion or Huntsman."

Apollo agreed to buy Huntsman through its Hexion unit in the summer of 2007. The deal has been on the brink of collapse for months after Hexion sued Huntsman in June, arguing the combined company would be insolvent. Huntsman countersued.

Recent court rulings have gone in Huntsman's favor and seemed to put the deal back on track.

In September, a Delaware court ordered Apollo to honor the terms of its agreement to acquire Huntsman, saying that, if the private equity firm refused to close the deal, it could be liable to Huntsman for damages beyond a $325 million break-up fee.

A Texas court also backed Huntsman by preventing Credit Suisse and Deutsche Bank from filing any lawsuit alleging the combination of Hexion and Huntsman would be insolvent.

But Credit Suisse and Deutsche Bank said in a statement on Tuesday they were unwilling to fund the deal. They argued that solvency opinions from Huntsman's chief financial officer and an independent appraisal firm were not satisfactory and said they had "serious reservations" about the prospects of a combined Hexion-Huntsman.

The banks declined to comment on the new lawsuit.

Huntsman shares closed up 58 cents, or 4.7 percent, at $12.86, less than half what they would be worth if the $28-a-share deal is completed.

2008/12/15　Huntsman

Huntsman terminates merger agreement and settles with Hexion and Apollo for $1 billion.
Huntsman continues multi-billion dollar Texas lawsuit against Credit Suisse and Deutsche Bank

Huntsman Corporation today announced it has terminated its Merger Agreement with Hexion Specialty Chemicals, Inc. ("Hexion").  In addition, Huntsman announced that it reached an agreement with Hexion, Apollo Management, L.P. ("Apollo") and certain of its affiliates to settle Huntsman's claims against Hexion, Apollo and its affiliates arising in connection with Huntsman's Merger Agreement with Hexion.  Payments to be made to Huntsman under the Settlement Agreement total $1 billion.

In addition to the $325 million break-up fee to be paid as provided in the Merger Agreement and which Hexion expects will be funded by Credit Suisse and Deutsche Bank (the "Banks") under an existing commitment, certain affiliates of Apollo will make cash payments to Huntsman under the Settlement Agreement totalling $425 million.  Certain affiliates of Apollo also will pay Huntsman an additional $250 million in exchange for 10 year convertible notes issued by Huntsman in that principal amount, which may be repaid at maturity in cash or common stock at Huntsman's election.

At least $500 million of the payments are to be paid to Huntsman on or before December 31, 2008, and any remaining payments that have not been made by that date must be made on or before March 31, 2009.

The Settlement Agreement also resolves Huntsman's pending claims against Apollo and its affiliates relating to Huntsman's prior merger agreement with Basell AF. 

In announcing the settlement, Huntsman's President and CEO Peter R. Huntsman stated, "We are pleased to have reached this agreement with Hexion and Apollo.  Receipt of these proceeds will enhance the strength of Huntsman's balance sheet and better position our company to prosper during the current turbulence in the global economy.  Additionally, our associates, customers and suppliers can now put the uncertainty concerning the outcome of the merger with Hexion behind them."

Leon Black, Chairman of Apollo Global Management, LLC, added, "We are happy to be resolving this situation in the best interest of our investors.  It puts to an end the six month disagreement and distraction between our companies.  As the majority stakeholder in Hexion and now an investor in Huntsman, we look forward to both companies traversing this economic cycle and prospering."

The settlement with Hexion, Apollo and its affiliates does not resolve the claims asserted by Huntsman against the Banks in its ongoing litigation against the Banks in Montgomery County, Texas.  Huntsman's suit against the Banks includes claims that the banks conspired with Apollo and tortiously interfered with Huntsman's prior merger agreement with Basell, as well as with the later Merger Agreement with Hexion.  A jury trial on those claims currently is set to begin on May 11, 2009.  As part of the Settlement Agreement, Apollo and its principals have agreed to fully cooperate in connection with Huntsman's litigation against the Banks.

Jon M. Huntsman, Founder and Executive Chairman of Huntsman Corporation, commented, "This is a significant settlement for our Company and its shareholders, but we must continue to pursue our multi-billion dollar Texas case against Credit Suisse and Deutsche Bank for the harm they have caused.  We remain focused on preparing for our May jury trial against the Banks."

Bloomberg News Service 01/15/2009

Judge dismisses Huntsman suit

A Texas judge dismissed Huntsman Corp.'s claims that Apollo Management LP founders Leon Black and Joshua Harris wrongly interfered in Huntsman's merger with another chemical company.

Judge Fred Edwards in Conroe, Texas, threw out Salt Lake City-based Huntsman's complaint Wednesday. The company reached a $1 billion settlement last month that resolved lawsuits between Huntsman and Apollo's Hexion Specialty Chemicals unit over their failed $6.5 billion merger.

Edwards's ruling doesn't affect Huntsman's Texas suit against Credit Suisse AG and Deutsche Bank for refusing to fund Apollo's buyout of the chemical company. In that case, the banks want Apollo officials held liable for a portion of any damages they face. Huntsman asked the judge to throw out those claims. Edwards asked that the claims be refiled in another form before he'll consider whether to dismiss them.

"I don't want to get tripped up in the court of appeals and have to relitigate this case because I wasn't careful enough," Edwards told lawyers a hearing Monday.

Huntsman rose 2 cents to $3.05 on the New York Stock Exchange. The company's shares have fallen 87 percent over the past 12 months.

New York-based Apollo outbid Basell Holdings BV, a Dutch chemical maker owned by Access Industries Holdings LLC, for Huntsman. That’s the basis for Huntsman’s interference suit against Apollo and its bankers. Huntsman’s suit seeking $3 billion in damages from the banks is set for trial May 11 in Texas state court.