US Huntsman settles for $1.73bn with Hexion lenders

23 June 2009 18:03 [Source: ICIS news]

Huntsman settles with lenders HOUSTON (ICIS news)--Huntsman reached a $1.73bn (€1.25bn) cash and financing settlement with Deutsche Bank and Credit Suisse - the lenders in its doomed $10.6bn merger with Hexion Specialty Chemicals, the US producer said on Tuesday.

Huntsman initially sought more than $4bn in damages against the lenders in a trial that began last week in a Texas state court.

Under the terms of the settlement, Huntsman will receive $620m in cash, $500m in senior secured term loan financing, $600m in unsecured note financing and $12m for the reimbursement of litigation costs, the company said.

Combined with a $1bn settlement with Hexion and Apollo in December, cumulative settlement proceeds from the failed merger are in excess of $2.7bn, the company said.

In its lawsuit against the lenders, Huntsman alleged that Hexion's offer was an inducement to dupe the company into rejecting an earlier acquisititon offer by Basell.

"This settlement with the banks marks a very successful conclusion to this litigation for the company and all of its stakeholders,” said CEO Peter Huntsman. “The cash and financing will enhance our already enviable cash position to more than approximately $1.7bn and provide us much greater flexibility as we manage our business.”

Despite the positive response from Huntsman, company shares fell, trading at $5.53/share at mid-day on the New York Stock Exchange, down 8%.

Huntsman said it expected to use the settlement proceeds to repay its $295m of senior secured notes due in 2010, while also substantially reducing the size of its current revolving credit facility.

Huntsman accepted Hexion's $28/share offer in July 2007, after it relinquished an earlier agreement with Basell.

Ultimately, the Hexion deal fell through, with both sides suing each other.

“Our officers and trial team did an outstanding job at trial, and I believe this settlement reflects those efforts and the integrity with which our company conducts its business,” said executive chairman Jon Huntsman.

Additional reporting by Al Greenwood

($1 = €0.72)

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By: Ben DuBose
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