The Woodlands, Texas - Huntsman Corp. has reported that Hexion Specialty Chemicals informed it late on 27 Oct that counsel to the banks Credit Suisse and Deutsche Bank, who have committed funding to its merger with Huntsman, do not believe the independent solvency valuation provided by American Appraisal meets the condition of its commitment letter and so do not plan to fund the proposed closing of the merger scheduled for 28 Oct.
Hexion has informed Huntsman it is working towards resolving the banks' concerns. Hexion also reported 27 Oct that certain stockholders of Huntsman have agreed to make an additional commitment to Huntsman of around $217 million, conditional upon closing of the merger, raising the total commitment of Huntsman stockholders to around $677 million.
Affiliates of Apollo Management, Hexion's parent company, have also agreed to make an additional cash investment of $210 million in Hexion, which, including the previous $540 million cash investment by Hexion on 9 Oct, takes the agreed aggregate cash investment in Hexion to $750 million.
"We are grateful for Apollo's continued support of Huntsman 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," said Craig Morrison, Hexion ceo.