28 June 2008 00:52 [Source: ICIS news]
HOUSTON (ICIS news)--US producer Hexion sees no basis for Huntsman to extend the termination date of their proposed merger past a 4 July deadline, the company's chief executive said on Friday in a letter.
The letter by Hexion CEO Craig Morrison was in response to one written by Peter Huntsman, Huntsman's CEO. The letters are the latest exchange made public in the troubled $10.6bn (€6.7bn) merger agreement.
The deal is now is mired in litigation. Hexion alleges that the merger would create an insolvent company, a position based on an opinion provided by financial adviser Duff & Phelps.
As such, Hexion said it does not owe Huntsman a $325m fee to kill the deal.
Huntsman accused Hexion of proposing the merger in bad faith. As such, Huntsman said it is owed damages of at least $3.1bn.
In the initial letter sent on 25 June, Huntsman requested a consultation with Hexion to discuss the 4 July deadline. Such a consultation is permitted under the merger agreement, which Huntsman said is still in force.
In addition, Huntsman wants copies of all the information that Duff used to draft its opinion, according to the letter. Huntsman also wants an update on regulatory approval.
In response, Hexion's CEO repeated his company's stance that the merger cannot be closed under the current terms of the agreement. As such, Huntsman has no basis to extend the agreement past 4 July.
Nonetheless, Hexion did agree to consult with Huntsman regarding the 4 July deadline, the letter said. However - as part of that consultation - Hexion wanted Huntsman to justify why it could exercise its right to extend the 4 July deadline.
Regarding the Duff report, Hexion said it should be made public.
However, some of the information used to draft the report is confidential, Morrison said. Hexion cannot release other pieces of information without permission from Duff or without violating antitrust laws, the letter said.
Regarding regulatory approval, Hexion said it has kept Huntsman up to date. The European Commission should approve the merger by 30 June, Hexion said.
Shares of Huntsman closed at $10.69 on the New York Stock Exchange, down 8.08%.
($1 = €0.63)
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