S&P: Huntsman still on watch

Standard & Poor's said it is keeping its ratings on Huntsman Corp., including the BB- corporate credit rating, on Creditwatch, where they were placed on June 26, 2007, with negative implications.

This update follows Huntsman's announcement that it has terminated its merger agreement with Hexion Specialty Chemicals Inc., the agency said.

Under the terms of a settlement with Hexion and Apollo Management LP, Huntsman expects to receive cash payments of $1 billion, consisting of $750 million of settlement payments and $250 million of cash proceeds from the issuance of 10-year convertible notes to Apollo affiliates, which Huntsman can repay in cash or common stock, the agency added.

"We will keep ratings on Huntsman on Creditwatch negative until there is further clarity on the use of the cash proceeds and after we evaluate the implications of expected debt reduction on the financial profile of the company," explained S&P credit analyst Kyle Loughlin.

"Also key to resolving the Creditwatch status of the ratings will be the understanding of which debt obligations will be reduced with the cash proceeds, so that we can update its recovery analysis and recovery ratings and notching of existing rated debt."

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