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BUSINESS
Two companies controlled by the Huntsman family are undergoing a major restructuring that will result in a third party, Credit Suisse First Boston's Global Opportunities private equity fund, owning almost half of the $8.5 billion-a-year Huntsman chemical empire.
Under agreements reached last week, Global Opportunities, Huntsman Corp.'s largest bondholder, will swap bonds worth about $700 million and contribute certain assets for equity in a new holding company. Separately, Global will spend about $430 million to buy ICI's 30% interest in Huntsman International, the joint venture formed in 1999 when ICI sold $4 billion worth of chemical businesses to Huntsman. Most Huntsman-related chemical assets will be put into the holding company, which will be owned 50.1% by the Huntsman family and 49.9% by Global. The family will continue to have operational and board control of all entities, holding nine out of 12 seats on the Huntsman companies board. Peter R. Huntsman, president and CEO of the Huntsman companies, says he is "absolutely delighted" with the restructuring, which still requires bank approval. "We view this as a new start for the company," he says. Through the two deals, Huntsman company debt will drop by $1 billion, Peter Huntsman says, reducing interest payments alone by $62.5 million a year. Combine this savings with other cost-cutting measures implemented over the nine months, he says, and Huntsman's annual expenses will be lower by $220 million, positioning it to weather the severest of future industry downturns. If the various transactions are successfully completed, they will herald a remarkable revival for companies that many were convinced would be forced to declare bankruptcy. "Our advisers, most of our bankers, and virtually all of our outside legal counsel had written us off," Peter Huntsman says. "They were telling us, 'Bankruptcy is your only option, and you will be lucky to have 5% control of the company.' " Still, although Huntsman companies have had outside shareholders in the past, Global's stake is by far the largest and marks the beginning of a shift of Huntsman company control out of family hands. Peter Huntsman says Global's intent--and the intent of Huntsman family members, including founder Jon M. Huntsman--is to largely cash out of the business within the next five to seven years. This will require some kind of "liquidity event," he says, such as a merger or public offering of stock in what is today the world's largest privately owned chemical maker. |
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