Huntsman Terminates Merger Agreement and Settles With Hexion and Apollo for $1 Billion

Huntsman continues multi-billion dollar Texas lawsuit against Credit Suisse and Deutsche Bank

16-Dec-2008 - USA

Huntsman Corporationy announced it has terminated its Merger Agreement with Hexion specialty chemicals, Inc.. In addition, Huntsman announced that it reached an agreement with Hexion, Apollo Management, L.P. and certain of its affiliates to settle Huntsman's claims against Hexion, Apollo and its affiliates arising in connection with Huntsman's Merger Agreement with Hexion. Payments to be made to Huntsman under the Settlement Agreement total $1 billion.

In addition to the $325 million break-up fee to be paid as provided in the Merger Agreement and which Hexion expects will be funded by Credit Suisse and Deutsche Bank under an existing commitment, certain affiliates of Apollo will make cash payments to Huntsman under the Settlement Agreement totalling $425 million. Certain affiliates of Apollo also will pay Huntsman an additional $250 million in exchange for 10 year convertible notes issued by Huntsman in that principal amount, which may be repaid at maturity in cash or common stock at Huntsman's election.

At least $500 million of the payments are to be paid to Huntsman on or before December 31, 2008, and any remaining payments that have not been made by that date must be made on or before March 31, 2009.

The Settlement Agreement also resolves Huntsman's pending claims against Apollo and its affiliates relating to Huntsman's prior merger agreement with Basell AF.

In announcing the settlement, Huntsman's President and CEO Peter R. Huntsman stated, "We are pleased to have reached this agreement with Hexion and Apollo. Receipt of these proceeds will enhance the strength of Huntsman's balance sheet and better position our company to prosper during the current turbulence in the global economy. Additionally, our associates, customers and suppliers can now put the uncertainty concerning the outcome of the merger with Hexion behind them."

The settlement with Hexion, Apollo and its affiliates does not resolve the claims asserted by Huntsman against the Banks in its ongoing litigation against the Banks in Montgomery County, Texas. Huntsman's suit against the Banks includes claims that the banks conspired with Apollo and tortiously interfered with Huntsman's prior merger agreement with Basell, as well as with the later Merger Agreement with Hexion. A jury trial on those claims currently is set to begin on May 11, 2009. As part of the Settlement Agreement, Apollo and its principals have agreed to fully cooperate in connection with Huntsman's litigation against the Banks.

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