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Hexion Specialty Chemicals says it will try–but doubts it will have much success–securing alternative financing for the $10.6 billion purchase of Huntsman Corp. Hexion earlier agreed to the purchase but now wants to drop it. Hexion has retained the investment bank Gleacher Partners as an adviser and is seeking Huntsman's consent to pursue alternative financing and release Huntsman's confidential information to potential financing banks. To date, Huntsman has only consented to "additional financing" above what banks had committed when the merger was signed. Hexion says the merger agreement has no such provision and only requires the firm to seek alternative financing at terms no worse than the original loans. But in a court filing last week, Hexion stated that it "does not believe that alternate financing on terms no less favorable than those provided in the commitment letter can be obtained." In that document, Hexion says Huntsman's debt has increased and that there is a gap between the committed financing and the amount of funds needed to close the deal. It cites poorer than expected performance in Huntsman's titanium dioxide, textile effects, and performance chemicals businesses. Huntsman has maintained that the committed financing is sufficient.
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