THE WOODLANDS, TX – Huntsman Corp. has announced it has terminated its merger agreement with Hexion Specialty Chemicals Inc. (Hexion). In addition, Huntsman announced that it reached an agreement with Hexion, Apollo Management, L.P. (Apollo) and certain of its affiliates to settle Huntsman’s claims against Hexion, Apollo and its affiliates arising in connection with Huntsman’s merger agreement with Hexion. Payments to be made to Huntsman under the settlement agreement total $1 billion.

 

In addition to the $325 million break-up fee to be paid as provided in the merger agreement, and which Hexion expects will be funded by Credit Suisse and Deutsche Bank under an existing commitment, certain affiliates of Apollo will make cash payments to Huntsman under the settlement agreement totaling $425 million. Certain affiliates of Apollo also will pay Huntsman an additional $250 million in exchange for 10-year convertible notes issued by Huntsman in that principal amount, which may be repaid at maturity in cash or common stock at Huntsman’s election.

 

At least $500 million of the payments are to be paid to Huntsman on or before Dec. 31, 2008, and any remaining payments that have not been made by that date must be made on or before March 31, 2009.

 

The settlement agreement also resolves Huntsman’s pending claims against Apollo and its affiliates relating to Huntsman’s prior merger agreement with Basell AF. In announcing the settlement,

 

Huntsman’s President and CEO Peter R. Huntsman stated, “We are pleased to have reached this agreement with Hexion and Apollo. Receipt of these proceeds will enhance the strength of Huntsman’s balance sheet and better position our company to prosper during the current turbulence in the global economy. Additionally, our associates, customers and suppliers can now put the uncertainty concerning the outcome of the merger with Hexion behind them.”