Web Date: October 14, 2008
Apollo Ponies Up Funds For Hexion
"We are grateful for Apollo's support as we continue to work toward closing the Huntsman transaction," Hexion Chief Executive Officer Craig O. Morrison says.
The move is a response to a judgment against Hexion in its lawsuit in the Delaware Court of Chancery seeking permission to back out of the Huntsman deal. In that suit, Hexion argued both that the combined company would be insolvent and that, owing to Huntsman's increased debt, alternative financing was necessary to complete the merger. In August, Hexion rejected a bid from major Huntsman shareholders to provide about $500 million in financing.
The court, siding with Huntsman, is ordering Hexion to "perform all of its covenants and obligations" under the merger agreement.
To that end, Hexion also recently agreed to sell its specialty epoxy resins business to Czech resins maker Spolchemie, fulfilling antitrust requirements imposed on the deal (C&EN, Sept. 29, page 18). The Delaware court found that Hexion had been "dragging its feet" in receiving such regulatory clearance.
There has been a sharp increase in Huntsman's share price since the Apollo financing was announced on Thursday, Oct. 9, which suggests a growing confidence on Wall Street that the deal will be consummated. Huntsman shares climbed 29% to $11.54 that day. But Huntsman is still trading at a significant discount to the $28-per-share acquisition price.
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