The world’s largest privately held chemicals group, which is a major player in the market for polyurethane like Bayer’s new Lanxness subsidiary, has announced a request to the US Securities & Exchange Commission to approve an initial public offering intended to raise about $1.25 billion. Citigroup, Credit Suisse First Boston, Merrill Lynch and Deutsche Bank would act as joint book-running managers for the proposed offering on the New York Stock Exchange, which is intended to reduce the group’s high debt of nearly $6 billion.
Matlin Patterson Global Opportunities Partners, a private equity group that was its largest bondholder, refinanced Huntsman in 2002, converting about $775 million in bond debt and interest into equity, while leaving the Huntsman family in control. A few weeks ago, Huntsman raised $375 million through a bond issue placed among institutional buyers. It also announced a plan to reduce fixed costs and overheads by at least $200 million over the next 18 months, with specific initiatives for each of its six business segments, partly by making increased use of shared services among them. It indicated possible layoffs and site consolidation in the near future, citing the extended economic downturn that the chemicals industry is going through.
The group’s polyurethane operations have gone through a certain reorganization lately, resulting in extraordinary charges of $9.9 million for the 3rd quarter ended Sept. 30, up from $3.7 million in the same period a year ago. In spite of these charges, they generated positive gross operating income (Ebitda) of $97.9 million in the latest period on sales of $745.9 million, as compared to Ebitda of $68.9 million on revenues of $597.4 million. The sales increase was due to a 13 percent rise in sales volumes for MDI and a 19 percent average increase in selling prices, due to higher demand, tighter supply, the strength of the euro and higher raw material and energy costs.
Huntsman’s total revenues rose by 28 percent to $2,946.7 million in the 3-month period, generating a 76 percent increase in Ebitda to $293.2 million. Adjusted to eliminate restructuring and other charges, Ebitda went up by 84 percent to $327.1 million. The final result was a net profit of $43.7 million against a loss of $90.7 million.