CONROE, Texas (Reuters) – Peter Huntsman never would have agreed to sell the $4.5 billion chemical company founded by his father if he thought the banks funding the deal could wiggle out of their commitment, the executive told a Texas court on Tuesday.
“This is about certainty,” Huntsman, president and chief executive officer of Huntsman Corp (HUN.N), told a jury in state district court located in a town about 40 miles north of Houston. “We’re selling 40 years, two generations of life’s work.”
The banks were lenders in a 2007 buyout led by private equity firm Apollo Management LP [APOLO.UL] that fell apart after Apollo and the banks backed out of the deal, claiming it would create an insolvent company as the U.S. economy deteriorated.
Under questioning from company lawyers, Peter Huntsman said Huntsman had agreed to a higher offer price from Apollo’s Hexion chemicals business even though the private equity firm had burned them in earlier negotiations.
So any deal struck, Huntsman told the jury, hinged on the soundness of financing.
And in the end, Huntsman believed it negotiated “a rock-solid, ironclad agreement,” the CEO told the court.
On Monday in opening arguments, lawyers for Huntsman alleged the investment banks had no intention of honoring contracts to finance the takeover of Huntsman Corp and had a side deal designed to protect themselves.
The buyout, struck in July 2007, was one of the last big deals signed in an era where credit was readily available to private equity firms.
When the global credit crisis hit, Deutsche Bank and Credit Suisse were unable to syndicate the deal’s hefty debt load.
Huntsman later sued to complete the sale to Apollo. Huntsman won that lawsuit and later agreed to settle with Apollo for $1 billion.
The two banks were Huntsman’s primary lenders and were chosen to back the financing because the company did not trust Apollo to close the deal, Huntsman’s lawyers contended. (Reporting by Anna Driver)