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Huntsman scraps plans to buy out ICI venture

After 20 years of acquisitions that helped build today“s largest privately held chemical maker, the Salt Lake City-based Huntsman Corp. has hit a brick wall over plans to buy out a joint venture from…

After 20 years of acquisitions that helped build today“s largest privately held chemical maker, the Salt Lake City-based Huntsman Corp. has hit a brick wall over plans to buy out a joint venture from Britain“s Imperial Chemical Industries Plc for around US$ 500 million. A new ICI deal, which was to be announced mid-December 2001, was rewritten after financial backers including Bain Capital and Blackstone Group backed out, worried about Huntsman“s US$ 6 billion in debt amid a slowing economy. Worries were compounded when cash-strapped Huntsman said it would defer paying interest on some bonds and hired restructuring shop Dresdner Kleinwort Wasserstein to negotiate with creditors. The $2.8 billion deal between Huntsman and ICI, forged in April, 1999, seemed a perfect match at the time. Huntsman-ICI, owned 70% by Huntsman himself, was a major step forward in ICI“s plan to exit commodity chemicals and move into higher-profit “specialty chemicals.“ And Huntsman, which forked over about US$ 2 billion in cash, used the assets to form Huntsman International, a major stepping stone for its plan for overseas growth. But the deal came with a caveat. It gave ICI the right to force Huntsman to buy out its 30% share of the joint venture in 2001, now worth an estimated US$ 500 million. When the time to exercise that option arrived, the economy had slumped and Huntsman, like many chemical companies, was struggling. Huntsman has now been forced to give ICI incentives to keep it in the partnership for at least another year.

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