Hexion Specialty Chemicals Inc. has announced that on December 13, 2008, Huntsman Corp. terminated the proposed merger between Huntsman and Hexion. On December 14, Hexion entered into a settlement agreement with Huntsman and other parties to end all litigation among Hexion, Apollo Management L.P. and its affiliates, the controlling shareholder of Hexion, Apollo’s principals and Huntsman.
Hexion will pay Huntsman the $325 million merger agreement termination fee. Hexion has financial commitments from affiliates of Credit Suisse and Deutsche Bank to fund the $325 million termination fee, which Hexion expects to promptly draw to fund the payment. Hexion intends for the termination fee to be borrowed by Hexion LLC, the parent company of Hexion, which will not impact Hexion’s operating performance or its compliance with its debt covenants. Hexion fully expects the Banks to honor their commitments associated with the funding of the termination fee. Separately, an affiliate of Apollo has agreed to make a $200 million investment in Hexion’s parent company, the proceeds of which will be used by Hexion for general business purposes.
In summary, under the terms of the agreement with Huntsman, an affiliate of Apollo and certain funds managed by Apollo have agreed to pay Huntsman $425 million to settle all claims. In addition, certain funds managed by Apollo have agreed to purchase $250 million principal amount of Huntsman senior convertible notes.
“We are pleased that this matter has been resolved,” said Craig O. Morrison, chairman and CEO of Hexion. “We appreciate Apollo’s ongoing support of Hexion. Their incremental investment in Hexion will help to solidify our leadership position in the marketplace. Moreover, it will help us remain a strong competitor in a difficult economic environment. We are well-positioned to compete globally as a stand-alone company, and we look forward to focusing fully on serving our customers and growing our business.”
HEXION ANNOUNCES TERMINATION OF MERGER WITH HUNTSMAN AND SETTLEMENT (12/15/08)
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