Huntsman Corporation (HUN) has sent the following letter to Hexion Specialty Chemicals regarding supplemental financing and Hexion's obligations (from HUN's perspective) for this transaction. HUN concludes the current exchange with the following:
The conditions to the Merger can and will be satisfied, and the conditions to Commitment Letter can and will be satisfied as well. All that is required is for you to satisfy the obligations you agreed to approximately one year ago. We believe that we can help you secure additional financing and allay your alleged fears regarding solvency or funding. If both your public statements and your statements to us that you are working to consummate the Merger are true, you should welcome our assistance with the Potential Investors.
It must be acknowledged at this point that HUN is taken every step and making every possible effort to convince Hexion/Apollo into reversing it's current position on this transaction. Whether or not this will actually work remains to be seen, but HUN's tenacity must be seen as a positive in a situation where there have been virtually no positive developments.
This publication continues to perceive HUN's chances of seeing this deal successfully completed as extremely low. As of this entry, Hexion/Apollo has given absolutely no indication that they intend to proceed with the transaction and this is certainly the bottom line, for the moment, in this case.
However, if HUN is able to continue to take positive, productive steps towards completion, this may establish the foundation for a favorable outcome in the Delaware Chancery Court in September -- a concept Hexion/Apollo must be aware of at this point. In other words, HUN's efforts may potentially motivate Hexion/Apollo into completing the transaction voluntarily, rather than being forced to do so in court. Hexion's responses, or lack thereof, over the course of the next month should offer insight into the company's intentions either way.
As of now, the possibility of deal completion occurring, again, seems very small (+/-20%).
Disclosure: We have no positions of any kind, in any security. We are a completely neutral source of research and analysis.