Huntsman Welcomes Shareholder Plan To Save Merger

NEW YORK (Reuters) – Huntsman Corp (HUN.N: Quote, Profile, Research, Stock Buzz) said on Friday it welcomed a shareholder proposal to salvage a $6.5 billion takeover of the chemicals company by a unit of U.S. buyout firm Apollo Management.

Apollo's Hexion Specialty Chemicals unit has been locked in a legal battle to get out of the $28-per-share deal, reached last year at the height of the leveraged-buyout boom.

Since then, the credit markets have seized up, making the math behind the deal no longer attractive. In June, Hexion filed suit against Huntsman seeking to limit its liability in the event that the deal fell apart.

It said at the time bank financing for the deal was in jeopardy due to Huntsman's financial condition.

Huntsman fought back, suing Apollo and its partners, seeking $3 billion damages.

On Thursday, hedge funds Citadel Investment Group, D.E. Shaw & Co, MatlinPatterson Global Advisers LLC and Pentwater Growth Fund Ltd — all Huntsman shareholders — offered a plan to finance at least $500 million of the deal, according to a letter sent to Apollo and Hexion.

That offer came less than two weeks before a trial is set to begin in Delaware to hear the case.

Apollo's Hexion late Thursday rejected the plan, saying that while it appreciated the shareholders' efforts, the proposal “does not come close to making the combined company solvent” due to a “dramatic increase in Huntsman's net debt and decrease in its earnings since last July.”

Huntsman countered on Friday that its management “firmly believes that the combination of Hexion and Huntsman Corporation will be solvent”.

Huntsman's shares closed on Thursday at $13.10.

Deutsche Bank AG (DBKGn.DE: Quote, Profile, Research, Stock Buzz) and Credit Suisse Group AG (CSGN.VX: Quote, Profile, Research, Stock Buzz) are the banks that agreed to finance the deal.

(Reporting by Paritosh Bansal and Megan Davies; Editing by Steve Orlofsky)