HUNTSMAN / APOLLO
Huntsman files counter lawsuit / Investor in the line of fire / “Fraud and tortuous interference”
All parties to the planned merger of US chemical group Huntsman (Salt Lake City, Utah / USA; www.huntsman.com) with Hexion Specialty Chemicals (Columbus, Ohio / USA; www.hexion.com) sealed a year ago for USD 10.6 bn (EUR 6.8 bn at current exchange rates) apparently have concluded that the deal was a mistake – for different reasons (see Plasteurope.com of 19.06.2008 and 13.07.2007). The mudslinging in the suits and countersuits suggests frantic moves to batten down the hatches before the chemicals economy and financial markets go completely sour.
In a “tit for tat” lawsuit, Huntsman is now challenging statements by Hexion and its private equity owner Apollo (New York / USA; www.apolloic.com) in an 18 June 2008 suit that the merger would create an “insolvent company,” due to its increased net debt and lower earnings outlook compared to year ago. The family-owned chemical producer is seeking a jury trial in Texas (where it has another corporate base) to determine liability for “actual damages exceeding USD 3 bn,” plus exemplary damages.”
Huntsman’s suit charges Apollo and partners Leon Black and Joshua Harris with “fraud and tortuous interference,” arguing that the private equity executives “induced” it to terminate the merger agreement with Basell – now LyondellBasell (Rotterdam / The Netherlands; www.lyondellbasell.com) – and embrace the Hexion deal. The suit suggests also that Apollo “commissioned” the opinion by Duff & Phelps (New York; www.duffandphelps.com) which claimed that a merged company would not meet standard capital and solvency tests.
CEO Peter Huntsman and his father Jon Huntsman, company founder and chairman of its board of directors, say Apollo made false or misleading allegations to them and their financial advisors in order to delay the transaction and push the price down. Rejecting claims that Huntsman’s financial position is diminished, Peter Huntsman said the company is “strong and profitable.” He said EBITDA in Q2 2008 will be “in line with” Q1, as selling prices were increased. “Our results in May were stronger than those achieved in April and we expect this trend to continue,” Peter Huntsman added.
Some financial analysts say they believe that Huntsman and Apollo/ Hexion will settle their differences, and the merger will go ahead. Last year, Basell said it would continue to “monitor the situation,” as the planned merger was “subject to uncertainty” and could run afoul of regulatory issues.
In a “tit for tat” lawsuit, Huntsman is now challenging statements by Hexion and its private equity owner Apollo (New York / USA; www.apolloic.com) in an 18 June 2008 suit that the merger would create an “insolvent company,” due to its increased net debt and lower earnings outlook compared to year ago. The family-owned chemical producer is seeking a jury trial in Texas (where it has another corporate base) to determine liability for “actual damages exceeding USD 3 bn,” plus exemplary damages.”
Huntsman’s suit charges Apollo and partners Leon Black and Joshua Harris with “fraud and tortuous interference,” arguing that the private equity executives “induced” it to terminate the merger agreement with Basell – now LyondellBasell (Rotterdam / The Netherlands; www.lyondellbasell.com) – and embrace the Hexion deal. The suit suggests also that Apollo “commissioned” the opinion by Duff & Phelps (New York; www.duffandphelps.com) which claimed that a merged company would not meet standard capital and solvency tests.
CEO Peter Huntsman and his father Jon Huntsman, company founder and chairman of its board of directors, say Apollo made false or misleading allegations to them and their financial advisors in order to delay the transaction and push the price down. Rejecting claims that Huntsman’s financial position is diminished, Peter Huntsman said the company is “strong and profitable.” He said EBITDA in Q2 2008 will be “in line with” Q1, as selling prices were increased. “Our results in May were stronger than those achieved in April and we expect this trend to continue,” Peter Huntsman added.
Some financial analysts say they believe that Huntsman and Apollo/ Hexion will settle their differences, and the merger will go ahead. Last year, Basell said it would continue to “monitor the situation,” as the planned merger was “subject to uncertainty” and could run afoul of regulatory issues.
26.06.2008 Plasteurope.com [211205]
Published on 26.06.2008
German version of this article...