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Huntsman family to back investment in Hexion to complete merger
By Lisa Kerner
Charlotte, N.C., Aug. 29 - The Huntsman family said it expects to join the shareholder initiative to invest $500 million in Hexion Specialty Chemicals, Inc. in order to close the merger of Hexion and Huntsman Corp.
Huntsman shareholders Citadel Investment Group, LLC and D.E. Shaw & Co., LP are leading the initiative, it was announced on Thursday.
The financing would be in the form of a subscription for contingent value rights, the investors said.
Hexion can use the financing provided in exchange for the contingent value rights to supplement debt financing for the merger consideration as well as for post-merger liquidity, Citadel said.
Citadel and D.E. Shaw said their own commitments of $245.02 million are subject to Hexion's receipt of similar commitments from a limited number of other large investors in Huntsman so that the total amount of all contingent value rights commitments is at least $500 million.
The investors' commitments are contingent on the consummation of the merger of Hexion and Huntsman under the terms of their merger agreement.
While Hexion agreed to acquire Huntsman for $10.6 billion in July 2007 and Huntsman shareholders approved the deal in October 2007, Hexion declined to extend the merger agreement in June.
Hexion believes that completing the merger would render the combined company insolvent.
Huntsman is "gratified by the confidence in the merged company expressed in this shareholder initiative" and continues to believe the combined company will be solvent, according to a company news release.
Based in Columbus, Ohio, Hexion makes thermoset resins. Huntsman is a Salt Lake City manufacturer of differentiated chemicals and pigments.
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