Status Report: Huntsman Corporation - Hexion Specialty Chemicals

Sep.14.08 | About: Huntsman Corporation (HUN)

Friday's early developments in the Huntsman Corporation (NYSE:HUN) - Hexion Specialty Chemicals saga include this SEC filing by HUN, which essentially chides Hexion for its conditional consent to the "backstop payment" offer disclosed previously:

We also reiterate that the Backstop Proposals by their terms are just that: backstops. If you honestly believe that the combined entity would not be solvent on your chosen capital structure without the backstop payments, you are in breach of your obligations under the merger agreement as a result of your failure to pursue the CVRs, raise equity or take all the other actions that are available to you to shore up your own balance sheet. You have been offered more funds at closing than that provided by the Backstop Proposals, and you have to date knowingly and intentionally refused to pursue any other available financing, even on terms as favorable as those reflected in the CVRs. We reserve all rights under the merger agreement or otherwise.

We must take issue with your 'concern' about the accuracy and completeness of our public statements. Our public statements have not been inaccurate or incomplete and we do not appreciate the suggestion otherwise. We fully recognize that we are engaged in litigation that you initiated and that the parties are this week setting forth the respective cases before the Delaware Chancery Court. We are confident that the evidence in the litigation will prove out our views.

Hexion has just responded with the following:

“From the public filing made by Huntsman this morning, it is clear Huntsman does not have a solvency certificate. We note the peculiar timing of the announcement in view of Huntsman's request for an expedited trial and the fact that the firm they reference was retained two months ago.

It now appears that in one step HUN has reversed whatever chances existed to avoid litigation via the backstop payment negotiations. This situation is now again devolving into a situation where a positive outcome for HUN, under any scenario, is becoming more unlikely due to its own posturing.

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