Apollo said it hopes the court will compel the banks to fund the merger. The banks declined to comment on the new lawsuit.
In the lawsuit, Hexion argued that the commitment letter from the banks gives them “virtually no outs, including no outs based on changes in circumstances in the economy generally, interest rates, debt markets, or the business of Hexion or Huntsman.”
Apollo agreed to buy Huntsman through its Hexion unit in the summer of 2007. The deal has been on the brink of collapse for months after Hexion sued Huntsman in June, arguing the combined company would be insolvent. Huntsman countersued.
Recent court rulings have gone in Huntsman’s favor and seemed to put the deal back on track.
In September, a Delaware court ordered Apollo to honor the terms of its agreement to acquire Huntsman, saying that, if the private equity firm refused to close the deal, it could be liable to Huntsman for damages beyond a $325 million break-up fee.
A Texas court also backed Huntsman by preventing Credit Suisse and Deutsche Bank from filing any lawsuit alleging the combination of Hexion and Huntsman would be insolvent.
But Credit Suisse and Deutsche Bank said in a statement last week that they were unwilling to fund the deal. They argued that solvency opinions from Huntsman’s chief financial officer and an independent appraisal firm were not satisfactory and said they had “serious reservations” about the prospects of a combined Hexion-Huntsman. —Reuters