Huntsman Obtains Solvency Opinion for Hexion Merger

NEW YORK (Reuters) – Huntsman Corp (HUN.N) said on Friday it has has received a written opinion from valuation firm American Appraisal, which states that the company to be formed from the pending merger of Hexion Specialty Chemicals, Inc and Huntsman Corp would be solvent.

The deal has teetered on collapse for months after private equity firm Apollo and its Hexion Specialty Chemicals unit tried to back out of the $28-a-share arrangement, announced at the height of the private equity boom in July 2007.

Apollo and Hexion, on the basis of an insolvency opinion obtained from advisory firm Duff & Phelps, filed suit against Huntsman in June, arguing that the combined company would be insolvent if the deal went ahead. Huntsman countersued.

Last month, the Delaware Court of Chancery in Wilmington rejected Apollo’s and Hexion’s claims and prohibited them from terminating the merger agreement.

Huntsman said it expects to request an updated solvency opinion from American Appraisal for delivery on the closing date, to satisfy the conditions contained in Hexion’s agreement with Credit Suisse (CSGN.VX) and Deutsche Bank (DBKGn.DE), which are the banks financing the deal.

Huntsman also obtained an injunction from a Texas District court that enjoined Credit Suisse and Deutsche Bank from filing any lawsuit that directly or indirectly alleges that the combination of Hexion and Huntsman would be insolvent.

The banks appealed the order, but on Thursday the Court of Appeals for the Ninth District of Texas unanimously affirmed the prior ruling in favor of Huntsman.

A jury trial on Huntsman’s claims against the banks, and against Apollo and its management team is set to begin Feb. 9, 2009.

Huntsman is seeking more than $3 billion in actual damages, plus exemplary damages, attorneys’ fees and interest, for claims including fraud and interference with the terms of the contract. (Reporting by Euan Rocha; Editing by Gary Hill)