Huntsman reaches settlement with banks for $1.73 billion of cash and financing

Huntsman Corporation announced on june 23, 2009 it has reached agreement with Credit Suisse and Deutsche Bank to settle Huntsman’s claims and end the ongoing trial against them in Texas state court for fraud and tortious interference in connection with Huntsman’s terminated merger agreements with Basell and Hexion Specialty Chemicals, Inc.

Under the terms of the settlement agreement, the Banks are providing the following to Huntsman on june 23, 2009:
¤ $620 million in cash
¤ $500 million senior secured term loan financing, 7 year term at LIBOR + 2.25%
¤ $600 million unsecured note financing, 7 year term at 5.5%
¤ $12 million reimbursement of litigation costs

Including the $1.0 billion settlement with Hexion and Apollo in December of 2008, cumulative settlement proceeds total in excess of $2.7 billion. The settlement proceeds from the Banks will be used to repay certain of Huntsman’s outstanding indebtedness and further enhance the company’s liquidity. The company intends to continue to pay its quarterly dividend of $0.10 per share. It is currently expected that Huntsman will use settlement proceeds to repay its $295 million of senior secured notes (due 2010, rate of 11.625%). Huntsman also intends to substantially reduce the size of its current revolving credit facility due 2010. Huntsman expects the $620 million of cash proceeds to incur cash taxes at a rate of approximately 23% which will eliminate its domestic tax net operating loss position.

Peter Huntsman, President and CEO, stated: “This settlement with the Banks marks a very successful conclusion to this litigation for the company and all of its stakeholders. The cash and financing will enhance our already enviable cash position to more than approximately $1.7 billion and provide us much greater flexibility as we manage our business. The financing offers us a much lower average cost of borrowing and extends the maturities of our borrowings such that the earliest meaningful maturity is July 2012. We are well positioned to prosper as we move forward past this concern.”

Jon M. Huntsman, Founder and Executive Chairman of Huntsman Corporation, commented: “I am very pleased with this settlement by the Banks. Our officers and trial team did an outstanding job at trial and I believe this settlement reflects those efforts and the integrity with which our company conducts its business. We will put these proceeds to good use as we press forward to write the next successful chapter of our company history.”

Source : Huntsman

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Huntsman reaches settlement with banks for $1.73 billion of cash and financing

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