Apollo Is On The Hook For Huntsman Buy
September 30, 2008
Hexion Specialty Chemicals, a Columbus, Ohio-based portfolio company of Apollo Global Management, was ordered Monday to complete its $10.6 billion acquisition of Texas chemicals company Huntsman.
Delaware court judge Stephen Lamb ordered Hexion to follow through with its $28-per-share purchase of Woodlands, Texas-based Huntsman. The development comes a month after Hexion spurned a $500 million financing overture from a trio of heavyweight hedge funds—Citadel Investment Group, D.E. Shaw and MatlinPatterson Global Opportunities Partners—and the Huntsman family that would’ve helped support Hexion’s acquisition struck last July.
Peter Huntsman, president and chief executive of Huntsman Corp., said in a statement that the company’s executives were gratified that Apollo’s allegations failed to persuade the Chancery Court. “Huntsman is a strong and dynamic company and Apollo’s misguided attempt to use 2008’s turbulent energy and financial markets to construct a solvency issue where none existed has now been exposed,” he said.
Apollo and Hexion filed suit against Huntsman in June, claiming that its increased debt and deteriorating financial results would result in an insolvent company if the acquisition were completed.
Huntsman said it plans to continue seeking more than $3 billion in damages from New York private equity firm Apollo and the firm’s partners, Leon Black and Joshua Harris. In addition, the company noted that if the deal’s closing has not occurred by Wednesday the transaction termination date shall be extended until the court determines that Hexion has complied with the court’s order.
The ruling will enable Huntsman to receive a $325 million termination payment from Hexion if the purchase isn’t completed.
Just how Hexion is expected to finance the purchase is unclear. The high yield bond and leverage loan credit markets are largely shut down as investors wait to see whether the government’s $700 billion bailout plan will be approved.
For more information on related topics, visit the following:
