Huntsman, Hexion remain at odds over completion of proposed merger

By Lisa Kerner

Charlotte, N.C., July 1 - Huntsman Corp. president and chief executive officer Peter Huntsman urged Hexion Specialty Chemicals, Inc. to move forward with the divestiture of a portion of its global specialty epoxy resins business as required for approval of the companies' merger by the European Commission.

Hexion was also asked to take all necessary action to obtain required regulatory approvals in the proposed merger of the company with Huntsman, according to a Huntsman news release.

On July 12, 2007, Hexion agreed to acquire Huntsman in an all-cash transaction valued at approximately $10.6 billion, including the assumption of debt. Huntsman shareholders approved the deal in October 2007.

Hexion has since gone to court to declare its contractual rights under the merger agreement, alleging that the agreed-upon capital structure for the combined company is no longer viable because of Huntsman's increased net debt and its lower-than-expected earnings, it was noted in a prior news release.

Huntsman disagrees with Hexion's belief that the merger cannot be consummated, according to a June 30 letter to Hexion included in a file 8-K filed with the Securities and Exchange Commission.

In addition, Huntsman believes it has the right to extend the termination date under the merger agreement even though Hexion does not see the need to extend the term past July 4.

Hexion said it would give Huntsman a requested copy of the Duff & Phelps report that was made to Hexion's board, according to a form 8-K filed with the SEC.

In order for Hexion's board to analyze whether there is sufficient funding available under the commitment letter to close the transaction and whether the combined company will be solvent, Hexion once again requested updated cash flows and debt models from Huntsman.

It was previously reported that Hexion doubted that Credit Suisse and Deutsche Bank can be provided with a reasonably satisfactory solvency opinion or certificate, a condition of their financing commitments.

Hexion also asked Huntsman to reconsider it decision to refuse to permit that Hexion's Delaware complaint be unsealed and that the Duff & Phelps report be made public.

According to Hexion, the detailed basis for its belief that the combined company would be insolvent and that Huntsman has suffered a material adverse effect should be made available to Huntsman shareholders.

Based in Columbus, Ohio, Hexion makes thermoset resins. Huntsman is a Salt Lake City manufacturer of differentiated chemicals and pigments.

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