There has been a new twist in the protracted sale of family-owned chemical company Huntsman. The family has announced that it will join a group of independent shareholders – understood to be several hedge funds – who have agreed to invest at least $500 million should the merger with prospective buyer Hexion be completed.
The proposed merger fell apart in June when Hexion, through its private equity owner Apollo Management, pulled out of the deal asserting Huntsman had higher debt and lower earnings than expected. Huntsman, which was founded by Jon M Huntsman (pictured), consequently sued two of Apollo's founders for false representation. The case is due to be heard next week.
The cash injection would seem to back up Hexion's claim that Huntsman is indeed not in the rudest financial health, but the Huntsmans maintain that "the combination of Hexion and Huntsman Corporation will be solvent."
However, Hexion has firmly rejected the proposal. "While we appreciate the efforts of these shareholders, due to the dramatic increase in Huntsman's net debt and decrease in its earnings since last July, their proposal does not come close to making the combined company solvent," it said in a statement.
"Huntsman's shareholders lack this information because Huntsman has, despite our repeated requests for more than two months, refused to permit its shareholders to review our Delaware complaint and [our independent] solvency analysis. If this information were made public, Huntsman shareholders would understand that this proposal is inadequate. Furthermore, the proposal is for incremental, not alternative debt financing, as specified under the merger agreement.
"We are not seeking to renegotiate this transaction," Hexion continued. "We are seeking to terminate it, and obtain judicial confirmation that Hexion has no obligation to pursue the acquisition or to pay Huntsman a termination fee."
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