You may remember, the takeover of chemical maker Huntsman Corp (HUN.N) agreement struck in July 2007 was among the last major leveraged deals signed during the boom ($6.5 billion deal). When the global credit markets froze up, it became impossible for Deutsche Bank and Credit Suisse to syndicate the deal's heavy debt load. Apollo sought to cancel the deal, and Huntsman later sued to complete the sale. Huntsman sued Wall Street's biggest players and already won a lawsuit and later agreed to settle the dispute with Apollo for a $1 billion payment. Huntsman is now suing Credit Suisse Group AG (CSGN.VX) and Deutsche Bank AG (DBKGn.DE) for more than $4.6 billion in damages for their role in the deal.
Those of us know, Peter Hunsman, could understand that he never would have agreed to sell company founded (1982) by his father if he thought the banks and Apollo would wiggle out of their commitment.
If you dig deep, Huntsman never trusted Apollo (or any private equity in that matter), but went along with the deal since two of Huntsman's primary lenders were chosen to back the financing (and Huntsman had a great deal of trust with these two banking institutions Credit Suisse and Deutsche Bank). On the other hand, these two banker were chosen by Apollo to woo Huntsman management away from Dutch chemical company Basell (a formative contender). The trial of Huntsman against two banks has begun on last Monday and it would be interesting to see the outcome? Will the justice be derailed in cumbersome legal process?
Can main-street folks trust Wall-Street? Do you ever wonder, why most private-equity firms do not do well in chemical industry transaction?
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