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By Kent Larsen
Huntsman Will Miss Bond Payment
SALT LAKE CITY, UTAH -- Huntsman Corp., the group of companies owned
by LDS billionaire Jon Huntsman and his family, announced Friday that
it will not make interest payments on its corporate bonds in December
and January. In a filing with the Securities and Exchange Commission,
the company blamed the missed payments on an industrywide downturn
that included weak demand, heavy competition and high energy costs.
The company's difficulties have been known at least since early
August, when Forbes magazine reported that Huntsman was in "a very
tight spot."
Huntsman spokesman Don Olsen explained that the difficulty is
industrywide, "You cannot look at any chemical company's financial
statements without seeing the horrible, horrible conditions that
exist for the entire industry." And Kyle Loughlin, chemical industry
analyst at Standard &Poor's, indicated that the situation at
Huntsman is very bad, "The company's financial profile has
deteriorated throughout the past year under the weight of onerous
debt levels, very weak liquidity and the continuation of a severe
operating trough in the domestic petrochemical sector."
Standard &Poor's has downgraded the company's bonds four times this
year, most recently on Friday, after the company announcement, when
it gave the bonds a CC rating. Standard and Poor's only has one other
rating, D, that is lower than Huntsman's current CC rating. The bond
ratings influence the current value of the bonds when they are sold
in the market and the interest rate that Huntsman will have to pay on
any new bonds issued.
In its August 6th issue, Forbes said Huntsman had $5 billion in
long-term debt, and was having to make $189 million in interest
payments each year. It also blamed some of Huntsman's difficulties on
its 1999 purchase of business lines from British chemical giant,
Imperial Chemical Industries. According to the Forbes report,
Huntsman had sold a 20% stake in the company to Boston-based venture
capital firm Bain Capital, which was run by fellow LDS Church member
Mitt Romney until he became head of the Salt Lake Organizing
Committee.
Huntsman has sold some assets and laid-off workers at some of its
plants in an effort to continue to meet its interest payments. Those
layoffs apparently included at least 700 workers and may include up
to 20% of its 14,000 employees worldwide. Only about 30 Huntsman
employees work in Salt Lake City, and most are spread among 42
countries outside the United States and Canada. The company has
annual revenues from all subsidiaries of $8.4 billion.
Last Monday Huntsman said it had received a commitment for up to $150
million in financing from giant international bank Deutsche Banc
Alex. Brown. But the bank won't allow Huntsman to use the money to
pay bondholders. The interest payments for its Huntsman Polymers debt
are due tomorrow (December 3rd) and the payments on the parent
company debt are due January 1st.
Source:
Huntsman Can't Pay On Bonds
Salt Lake Tribune 1Dec01 US UT SLC B4
By Lesley Mitchell: Salt Lake Tribune
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