Processing Magazine

Huntsman reaches settlement with banks for $1.73 billion

June 24, 2009
Huntsman Corporation announced it has reached an 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 tortuous interference in connection with Huntsman''s terminated merger agreements with Basell and Hexion Specialty Chemicals, Inc., reported by PRNewswire. Under the terms of the settlement agreement, the Banks are providing the following to Huntsman:
* $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.