Moody's: Huntsman outlook developing

Moody's Investors Service said that Huntsman Corp.'s outlook remains developing following the announcement that the company has reached an agreement to sell its European commodities business to Sabic, which the agency said reflects the ongoing restructuring efforts that are actively taking place to separate Huntsman's base chemicals and polymer segments from its differentiated segments.

The proposed material debt reduction along with a reduction in U.K. pension liabilities in the amount of about $126 million is a credit positive and this recent announcement supports Moody's belief that objectives for incremental debt reduction approaching $1.45 billion by the end of 2007 are possible. Upon completion of the proposed debt reduction with proceeds of the sale, the outlook may move to positive.

The developing outlook reflects the fact that the ratings may change subject to the development of a more formal debt structure and financial philosophy (including the possibility of dividends and incremental acquisitions) for the remaining businesses to be held at the differentiated segments, the agency said. Moody's believes the decision to pursue a split was prompted by ongoing concern over a "low" stock price valuation along with the receipt of an indication of interest from an outside party, occurring in late 2005, regarding an acquisition of all of the outstanding stock of Huntsman.

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