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Huntsman Sues Apollo
The company seeking more than $3 billion in damages for fraud and tortious interference.
June 23, 2008
Huntsman said Monday it has filed suit against Apollo Management, seeking more than $3 billion in damages for fraud and tortious interference.
In a statement, Huntsman president and chief executive, Peter Huntsman, lowered the boom on Apollo partners Leon Black and Joshua Harris, identifying the buyout executives by name as part of its suit and taking the pair to task over the company’s derailed acquisition with Basell Holding last year. “It is now clear that, to get Huntsman to terminate its contract with Basell, Apollo falsely represented to Huntsman its commitment to closing a merger with Hexion at $28 per share, when it really intended all along to then delay the process and create enough problems with the transaction to bring us back to the table at a lower price.”
Apollo portfolio company Hexion issued a response to the Huntsman announcement, calling it without merit: “It is unfortunate that Huntsman has chosen to file a baseless lawsuit against Apollo and to personally sue two of its principals. Huntsman’s Texas suit violates a clear provision of the merger agreement which requires that any litigation be brought exclusively in the State of Delaware. As we alleged in our suit, primarily due to Huntsman’s underperformance, we believe that consummating the merger on the basis of the capital structure agreed to with Huntsman would render the combined company insolvent. In fact, Huntsman’s suit does not dispute that the combined company would be insolvent.”
An Apollo press representative declined to comment further on the matter.
Huntsman chairman and founder, Jon Huntsman, meanwhile, said that Apollo senior executives Black and Harris pursued a strategy that was designed for Huntsman to terminate its deal with Basell and accept promises that the Apollo executives “never intended to keep – all calculated to contrive a nonexistent ‘purchase option’ we specifically refused to grant Hexion during our negotiations.”
The company, which also plans to contest the Apollo and Hexion suit filed last week in Delaware, is seeking a jury trial in Conroe, Texas, to resolve its dispute with the New York investment firm.
CEO Huntsman also said that the company’s adjusted second quarter Ebitda will be in line with its first quarter cash flow because price increases the company is putting into place given higher raw material and energy costs. “Our results in May were stronger than those achieved in April and we expect this trend to continue,” he said.
On May 29, Huntsman announced that it would raise prices for all of its products by as much as 25% for certain products to counter energy price increases. It reported $169.5 million of Ebitda for the first quarter in an earlier quarterly regulatory filing in May.
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