If you have followed the old broken and then re-engaged private equity buyout of Huntsman Corporation (NYSE: HUN), then you might feel like you witnessed a "private equity meets the credit crunch and the recession" tennis match. This morning, Hexion announced that it has secured additional funding commitments to support this merger. Certain Huntsman holders agreed to make an additional cash commitment to Huntsman of $217 million.
Of course this is conditional upon the closing of the merger, but thisnow puts the infusion into the company at roughly $677 million.
In addition, investment funds managed by affiliates of ApolloManagement, L.P. have agreed to make an additional cash equityinvestment of $210 million in Hexion. Together with the $540 millioncash equity investment announced by Hexion on October 9, 2008,investment funds managed by affiliates of Apollo Management, L.P. havenow agreed to make an aggregate cash equity investment of $750 millionin Hexion.
This has been a very interesting twist of fate for both Huntsman andfor Apollo and othe rprivate equity firms. This deal had originallybeen called off, but material changes as an excuse to not close themerger did not pertain to a serious slowdown in the economy which anyprivate equity firm should have considered and seen coming by the endof 2007.
Last week, Huntsman announced that American Appraisal, a leadingvaluation firm, concluded that the merged company would be solvent.That was to keep Hexion and Apollo from claiming the insolvency card.
It now looks like this merger is going to close, or at least thechances are rising each week. Huntsman Shares are up almost 7%pre-market at $12.40.
Jon C. Ogg
October 27, 2008