Huntsman Corp., the chemical maker seeking to force completion of a $6.5 billion buyout by Hexion Specialty Chemicals Inc., plans to obtain an opinion from a valuation firm that the combined company would be solvent.
American Appraisal will provide a standard solvency opinion letter, Huntsman said Friday in a letter to Hexion filed with regulators. Huntsman is run from The Woodlands, Texas, and Salt Lake City.
Huntsman and Hexion, a unit of New York-based Apollo Management LP, have been arguing this week in Delaware Chancery Court over Hexion's effort to scuttle the merger. Hexion got an opinion from Duff & Phelps LLC that the combined company's debts would exceed its assets because of Huntsman's deteriorating finances.
"It is clear Huntsman does not have a solvency certificate," Hexion said Friday in a regulatory filing. "We note the peculiar timing of the announcement in view of Huntsman's request for an expedited trial and the fact that the firm they reference was retained two months ago."
Huntsman's counsel hired American Appraisal for consultation on July 14, and Huntsman asked the firm on Sept. 5 whether it could provide a solvency opinion, Huntsman said Friday.American Appraisal told Huntsman Thursday night that it could provide an opinion stating the combined entity would be solvent.
A solvency opinion is required by Hexion's lenders, Credit Suisse and Deutsche Bank AG, to complete the deal.
Huntsman rose $1.49, or 13 percent, to close at $13.20 on Friday. The shares have dropped 49 percent this year.
Huntsman accepted proposals from share-owning Huntsman family members and other stockholders to add $416.5 million in "backstop payments" to Huntsman's balance sheet in an effort to complete the deal, the company said in a separate letter to Hexion included in the filing. Hexion on Thursday conditionally accepted the proposals, while saying the funds won't make the combined entity solvent.
"The filings this morning were the first tangible sign of the two sides moving closer together," Laurence Alexander, a New York-based analyst at Jefferies & Co., said Friday in a phone interview. "This could mark a turning point with respect to Hexion and Huntsman coming to an agreement on revised terms" before the Delaware judge makes his ruling, he said.