Exhibit 99.2
July 28, 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:
I am disappointed by your letter dated July 25,
2008. In the previous weeks you have repeatedly
alleged that there are issues
regarding the solvency of a post-merger Hexion and the sufficiency of funds
available under the Commitment Letters. Your
decision to refuse our assistance in helping you obtain additional financing seems
at odds with your prior public statements that you are prepared to undertake
the efforts required of you under the Merger Agreement to consummate the
Merger.
We will once again try to be clear: Hexion’s obligations are not limited
to seeking Alternative Financing. Hexion
assumed all financing risk in connection with our Merger. This is not a characterization, but an
inarguable conclusion as the Merger Agreement has no financing condition. This is what we negotiated with Apollo and
its advisors. This is what is set forth
in agreement we executed with Hexion. When
the required antitrust/competition conditions are satisfied (and we remind you
of your hell-or-high-water obligation in that regard), and the Court has
determined that no Material Adverse Effect has occurred, you will be expected
to close the Merger.
Based on your words and actions to date there appears to be a
fundamental disconnect between you and us as to Hexion’s obligations to secure
the funds necessary to consummate the Merger.
You seem to believe that the provision in the Merger Agreement referring
to your obligation to seek Alternative Financing is somehow your sole
obligation with respect to financing in the event a solvency or funding issue were
to arise. We disagree.
10003 Woodloch Forest Drive, The Woodlands,
Texas 77380
Tel: 281-719-6000 Fax: 281-719-6416 www.huntsman.com
You have agreed in the Merger Agreement not only to seek Alternative
Financing, but to use your “reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, …all things necessary,
proper or advisable to consummate the Merger.”
Perhaps more importantly, you have agreed, without any limitation based
on the use of any particular level of efforts, to provide to us and our Board
of Directors, a solvency letter opining that, immediately after the
consummation of the Merger, the post-Merger Hexion would be solvent. This absolute obligation is not tied to your “Financing”
(or “Alternate Financing”) and requires you to take the steps necessary to
procure a solvency letter. Hence, our
belief that your obligation to deliver the funds required under the Merger
Agreement is absolute, and that it would behoove you to be seeking additional
or supplemental financing. To date
Hexion’s failures in this regard can be nothing less than an intentional breach
of the Merger Agreement. Ultimately, the
Court will decide which of us is correct, but we are quite confident that our views
will prevail.
This fundamental disconnect is reflected in the mandate you have given
Gleacher – as you say in your letter they have been tasked with securing “Alternate
Financing”, but not the additional financing the potential investors that have
approached us are willing to provide. As
we have repeatedly stated, there is nothing to indicate that the financing
under the Commitment Letters has become unavailable. Rather, you have taken unilateral actions to
sabatoge that financing and then sought refuge in court. Despite these actions, and in an effort to do
what is best for Huntsman stockholders, we are seeking to help Hexion in
receiving financing that would compliment the financing contemplated by the Commitment
Letters. If Gleacher is willing to
discuss additional financing, we would gladly refer them to Gleacher. But since they are not, then why waste anyone’s
time.
We repeat our request for your consent to provide Hexion confidential
information, including, but not limited to, the Commitment Letter, to potential
investors. In the absence of your
consent we will proceed with our discussions in compliance with all applicable
disclosure prohibitions. Please do not
hesitate to contact me directly with any questions or comments that you may
have.
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Sincerely,
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Peter
R. Huntsman
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President
and Chief Executive Officer
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