NEW YORK (Reuters) – Hexion Specialty Chemicals said on Monday it received additional funding commitments to support its buyout of rival Huntsman Corp (HUN.N: Quote, Profile, Research, Stock Buzz), saying it is moving expeditiously to close the deal.
The deal has teetered on collapse for months, after Hexion and its parent Apollo Management filed suit against Huntsman in June, arguing that the combined company would be insolvent if the deal went ahead. Huntsman countersued.
However, a series of recent court rulings on the dispute have gone in Huntsman’s favor, undermining Apollo and Hexion’s arguments against the $6.5 billion deal, which was struck at the height of the private equity boom in 2007.
Hexion said certain stockholders of Huntsman agreed to make an additional cash commitment to Huntsman of about $217 million — conditioned upon closing of the merger.
This raises the total amount of committed payments from Huntsman stockholders to about $677 million.
Additionally, Apollo has agreed to make an additional cash equity investment of $210 million in Hexion. In total, Apollo and its affiliates have now agreed to make an aggregate cash equity investment of $750 million in Hexion.
Last month, the Delaware Court of Chancery in Wilmington rejected Apollo’s and Hexion’s claims and prohibited them from terminating the merger agreement.
“Apollo Management is fully supportive of the transaction and positive about the potential prospects for the combined Hexion-Huntsman company,” a spokesperson for Apollo said in Hexion’s statement on Monday.
William Lefkowitz, an options strategist at brokerage firm vFinance Investments in New York, said the investor sentiment in Huntsman is getting more upbeat.
“Now people think that there could a renegotiated deal and some investors are buying Huntsman November $15 through $22.50 calls on speculation that a finalized deal could be announced shortly. People are buying calls in hopes for further stock gains.”
So far, 7,282 calls vs. 1,440 puts traded in Huntsman during the first half of the session. Sentiment based on order flow was 54 percent bullish, according to option analytics firm Trade Alert.
Investors often turn to equity call options allowing them to buy the company’s shares at a given price and time, to speculate on share price appreciation.
Apollo and Hexion had offered to buy Huntsman for $28 a share, but the chemical makers shares have plummeted due to the merger dispute.
Huntsman shares rose 12 percent to $13.04 in midday trading on the New York Stock Exchange. (Reporting by Euan Rocha and Doris Frankel in Chicago; Editing by Frank McGurty)