By Liz White, editor
The Woodlands, Texas - Huntsman Corp. announced 15 Dec 2008 that it had ended its merger agreement with Hexion Specialty Chemicals Inc., and reached an agreement with Hexion, Apollo Management, LP and some Apollo affiliates to settle Huntsman's claims against them for a total of $1000 million.
The deal follows a protracted period of dispute over the merger, involving several lawsuits, since the deal was announced in July 2007.
The sum is made up of a $325 million break-up fee, to be paid as provided in the merger agreement - which Hexion expects will be funded by Credit Suisse and Deutsche Bank under an existing commitment. Certain affiliates of Apollo will also make cash payments to Huntsman under the settlement agreement totalling $425 million.
Apollo affiliates will also pay Huntsman an additional $250 million for 10-year convertible notes issued by Huntsman, which may be repaid in cash or common stock.
Huntsman said at least $500 million is to be paid by 31 Dec 2008, and any remaining payments by 31 March 2009.
The agreement also resolves Huntsman's pending claims against Apollo and its affiliates relating to Huntsman's prior merger agreement with Basell AF.
"We are pleased to have reached this agreement with Hexion and Apollo," said Huntsman's president and ceo Peter Huntsman, in the statement.
"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," Peter Huntsman added.
The settlement does not resolve the claims by Huntsman against Credit Suisse and Deutsche Bank in its ongoing litigation in Montgomery County, Texas.
Huntsman's suit 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 is set to begin on 11 May 2009.