Huntsman to extend Hexion merger agreement

02 July 2008 09:25  [Source: ICIS news]

LONDON (ICIS news)--Huntsman will deliver a formal notice of a 90-day extension to its troubled $10.6bn (€6.7bn) merger agreement with Hexion Specialty Chemicals on 4 July, the company said on Wednesday.

Huntsman said in a statement that its board of directors unanimously provisionally authorised the US company to exercise its right to extend the merger agreement to 2 October.

The company added that it had filed its answer and counterclaims to the Hexion lawsuit in Delaware and had asked the court to expedite the proceedings.

The counterclaims made by Huntsman in the filing include breach of contract, breach of good faith and fair dealing, defamation, injurious falsehood and commercial disparagement.

“Huntsman asked the Delaware court to declare that the premature and inappropriately released Duff & Phelps opinion does not excuse Hexion from its obligations, that it will in fact be possible to provide Hexion's lenders with assurance of solvency and to declare that no material adverse effect has occurred under the merger agreement,” the company said.

“[Hexion’s owners] Apollo and Hexion continue to assert their ongoing intention that Hexion will do the work necessary to complete the transaction, and we are asking the Delaware court to make those more than hollow words," said Huntsman CEO and president Peter Huntsman.

Jon M Huntsman, founder and chairman of Huntsman, said he had been deeply disappointed with Apollo owners Leon Black and Josh Harris in the past two weeks during the dispute.

“However, I believe, as does the rest of our board, that all of the conditions to closing this merger can and will be satisfied, and that the conditions to Hexion's commitment letter with its lenders can and will be satisfied as well,” he added. 

For the past week, Huntsman and Hexion CEO Craig Morrison have publicly exchanged letters that discussed the merger. On 28 June, Morrison said he saw no basis for Huntsman to extend the termination date of their proposed merger past the 4 July deadline.

On 18 June, Hexion filed a lawsuit in a Delaware court seeking to break its agreement. In its suit, Hexion alleges that the merger would create an insolvent company, largely based on the opinion of financial advisers Duff and Phelps.

Huntsman counter-sued Hexion's owners Apollo in a Texas district court on 23 June.

Huntsman accepted an offer from Hexion to be acquired for $28/share in July last year.

($1 = €0.63)

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By: Hilde Ovrebekk
+44 20 8652 3214

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