Huntsman $250 million mandatory talked with 5.0%-5.5% dividend, up 18%-22%; to price next week

By Ronda Fears

Nashville, Jan. 31 - Huntsman Corp. launched its $250 million three-year mandatory convertible on Monday with guidance for a 5.0% to 5.5% dividend and 18% to 22% initial conversion premium.

The convertible is scheduled to price alongside the Salt Lake City-based chemical company's initial public offering of stock - 55.7 million shares at an estimated range of $21 to $23 a share - next week.

Convertible bookrunners are Citigroup Global Markets Inc., Credit Suisse First Boston, Merrill Lynch and Deutsche Bank Securities.

The mandatory has a par of $50. There is a provisional call with a 140% threshold.

All dividends will be collateralized by using $40 million of proceeds to buy Treasuries.

There is a $37.5 million greenshoe available on the convertible offering.

Of total estimated proceeds of $1.3 billion, $591.3 million from the IPO will go to redeem in full HMP Equity Holdings Corp.'s 15% senior secured discount notes due 2008. In addition, $486.6 million is planned to redeem in full Huntsman International Holdings LLC's 13.375% senior discount notes due 2009 and, $177.9 million is earmarked to repay the $159.4 million principal amount of Huntsman LLC's 11.625% senior secured notes due 2010. The company also plays to repay in full Huntsman LLC's 15% subordinated note to Horizon Ventures LLC that matures in 2011.

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