THE WOODLANDS, Texas — Huntsman Corp. said Tuesday that two investment banks will pay it a $1.7 billion settlement over its accusation they schemed to scuttle a $6.5 billion buyout of the chemicals-maker last year.
The agreement with Switzerland’s Credit Suisse and Germany’s Deutsche Bank ends a trial in Texas state court on fraud charges.
Huntsman, based in Salt Lake City but operated from suburban Houston, was seeking up to $4.6 billion in compensatory damages.
The settlement will give Huntsman a cash infusion and access to financing at a time when chemical producers are struggling with weak sales linked to the recession.
The banks will pay Huntsman $620 million in cash and provide $500 million in senior-debt financing, $600 million in unsecured- note financing and $12 million in legal costs.
Huntsman claimed the banks worked behind the scenes to renegotiate a funding agreement with Hexion Specialty Chemicals’ owner, the private equity firm Apollo Management.
Hexion had agreed to buy Huntsman in July 2007 for $6.5 billion, with Credit Suisse and Deutsche Bank providing the financing.
Hexion began backpedaling last summer, and Apollo pushed in court to have the agreement canceled, citing Huntsman’s deteriorating finances.
A Delaware judge ordered Apollo to try to close the deal anyway, but Credit Suisse and Deutsche Bank said they wouldn’t fund it. The chemical companies parted ways, and Huntsman received a $1 billion settlement.
Huntsman noted that with its $1 billion settlement with Hexion and Apollo in December, total proceeds exceed $2.7 billion.
