The Wall Street Journal is reporting "that Vice Chancellor Stephen Lamb
of the Delaware Court of Chancery ruled that Apollo-owned Hexion
knowingly and intentionally breached numerous of its covenants under
the merger contract, and ordered Hexion to honor its obligations under
the deal."
Hexion Specialty Chemicals Inc. agreed to pay $28 a share for Huntsman in July 2007, but changed
its mind and backed out after the credit crunch changed the deal's
ability to get financing on favorable terms. Apollo and Hexion filed a
lawsuit saying that Huntsman has experienced a material adverse change
in its business since the merger was struck and that the combined
companies would be insolvent. Huntsman's counterclaim alleges that
Hexion has intentionally breached the merger agreement.
If there is no MAC and Hexion does not win on the insolvency claim,
then it is at least liable for a $325 million termination fee. But what could be even
worse is Lamb's decision that Hexion intentionally breached the agreement,
since it allows Huntsman to seek damages equal to the deal value including interest. Apollo and Hexion said that are
reviewing their options after the ruling.
- George White
See WSJ story
See Dealscape story on Hexion/Huntsman
