Exhibit 99.1
July 24, 2008
BY FACSIMILE AND OVERNIGHT
COURIER
Craig O. Morrison
Hexion Specialty Chemicals, Inc.
180 East Broad Street
Columbus, Ohio 43215
Facsimile: (614) 225-7495
Joshua J. Harris
Apollo Management VI, L.P.
9 West 57th Street, 43rd Floor
New York, NY 10019
Facsimile: (212) 515-3288
Dear Josh and Craig:
We recently
have been approached on an unsolicited basis by several financial investors (the
“Potential Investors”) that have expressed an interest in providing
supplemental financing to Hexion in connection with our Merger. We seek your consent to our sharing Hexion
confidential information and materials, particularly the Commitment Letter,
dated July 11, 2007, between Hexion and Credit Suisse and Deutsche Bank,
with the Potential Investors. Let me
describe why we believe you should provide that consent.
Let me first
reiterate our strongly held view that the financing contemplated by the
existing Commitment Letter is more than adequate to consummate our Merger and
that Hexion, following consummation of the Merger, will be solvent. Unfortunately, your public statements to the
contrary have given rise to concern in some quarters that the financing might
be inadequate to permit our Merger to be completed and even more troubling, that
your lack of financing may in some way excuse you from consummating the Merger. The Potential Investors, responding to those
concerns, have suggested that they would be willing to provide financing to
Hexion that would supplement the financing available under the Commitment
Letter, in order to facilitate the closing of the Merger and provide the
post-merger Hexion with additional working capital, while at the same time
eliminating any possible concern about the solvency of the post-merger Hexion
that may have been raised in the minds of the lenders under the Commitment
Letter.
10003 Woodloch Forest
Drive, The Woodlands, Texas 77380
Tel: 281-719-6000 Fax: 281-719-6416 www.huntsman.com
The Merger Agreement, to which you agreed after
lengthy negotiations, is clear: your
obligation to consummate the Merger is not conditioned upon Hexion’s obtaining
financing. Hexion represented that the
funds to be provided under the Commitment Letter would be adequate to
consummate the Merger and that Hexion, as the surviving corporation of the
Merger, would be solvent. Moreover, Hexion
agreed and principals of Apollo assured our board of directors personally, that
you would take all actions and do all things, “necessary, proper or advisable”
to satisfy all terms and conditions in the Commitment Letter, consummate the
financing and close the Merger.
We understand
from your prior communications that you are seeking Alternative Financing as
contemplated by the Merger Agreement. We
have previously indicated that we believe these efforts are misplaced, because
the Commitment Letter is still in effect.
If you truly believe there are issues regarding the solvency of a
post-merger Hexion or the sufficiency of funds available under the Commitment
Letters, you are required by the Merger Agreement to seek to arrange
supplemental or additional financing that solves those problems. Since it is in the best interests of Huntsman
and its stockholders that we assist you in obtaining that supplemental or
additional financing, we are prepared to pursue discussions with the Potential
Investors to assist Hexion in living up to its obligations under our Merger
Agreement. We would expect to receive
executed confidentiality agreements from the Potential Investors prior to
providing them with confidential information and we would continue to comply in
all respects with the terms of the Merger Agreement.
The conditions to
the Merger can and will be satisfied, and the conditions to Commitment Letter
can and will be satisfied as well. All
that is required is for you to satisfy the obligations you agreed to
approximately one year ago. We believe
that we can help you secure additional financing and allay your alleged fears
regarding solvency or funding. If both
your public statements and your statements to us that you are working to
consummate the Merger are true, you should welcome our assistance with the
Potential Investors. We look forward to
receiving your consent shortly, and please do not hesitate to contact me
directly with any questions or comments that you may have regarding our
request.
Sincerely,
Peter R. Huntsman
President and Chief
Executive Officer
Agreed and Accepted
as of the date first written above
Hexion Specialty Chemicals, Inc.
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cc:
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William Carter
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Jeffrey B, Floyd
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Hexion Specialty Chemicals, Inc.
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Vinson & Elkins L.L.P.
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180 East Broad Street
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1001 Fanin, Suite 2500
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Columbus, Ohio 43215
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Houston, Texas 77002
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Facsimile: (614) 225-7495
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Facsimile: (713) 615-5660
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Andrew J. Nussbaum
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John A. Marzulli, Jr.
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Wachtell, Lipton, Rosen & Katz
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Shearman & Sterling LLP
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51 West 52nd Street
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599 Lexington Avenue
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New York, New York 10019
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New York, New York 10022
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Facsimile: (212) 403-2000
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Facsimile: (212) 848-7179
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