Huntsman said Tuesday two investment banks will pay it a $1.7 billion settlement over its accusation they schemed to scuttle a $6.5 billion buyout of the chemicals maker last year.
The agreement with Switzerland's Credit Suisse and Germany's Deutsche Bank ends a trial in Texas state court on fraud charges. Huntsman, based in Salt Lake City but operated from suburban Houston, was seeking up to $4.6 billion in compensatory damages.
The settlement will give Huntsman a cash infusion and access to financing at a time when chemical producers are struggling with weak sales linked to the recession.
The banks will pay Huntsman $620 million in cash and provide $500 million in senior-debt financing, $600 million in unsecured note financing and $12 million in legal costs.
Huntsman claimed the banks worked behind the scenes to renegotiate a funding agreement with Hexion Specialty Chemicals' owner, the private equity firm Apollo Management.
Hexion had agreed to buy Huntsman in July 2007 for $6.5 billion, with Credit Suisse and Deutsche Bank providing the financing. Hexion began backpedaling last summer and Apollo pushed in court to have the agreement canceled, citing Huntsman's deteriorating finances.
A Delaware judge ordered Apollo to try to close the deal anyway, but Credit Suisse and Deutsche bank said they wouldn't fund it. The two chemical companies parted ways and Huntsman received a $1 billion settlement.